An exploratory study into the introduction of a successful derivatives market in Kenya
Date
2013
Authors
Noreh, Nancy Angano
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
The purpose of this study was to explore the factors that contribute to the success of a
derivatives exchange and to establish whether these factors exist in Kenya which hopes
to introduce its own derivatives exchange in the near future. Primary data was collected
from capital market participants who included: stock brokers} investment banks} fund
managers} investment advisors and regulators through the use of questionnaires; and
secondary data from statistical databanks. A comparative study was used to analyse the
data by benchmarking the indicators that explain the factors in a successful market and
comparing the situation existing in Kenya in light of them. Descriptive analysis was also
used for the primary data. The study found that economic development} political
stability} a developed capital market} the types of products traded} infrastructural
systems} a legal and regulatory framework} education of market participants} and many
and active investors were important factors for the success of a derivatives exchange.
The study also found that Kenya was not yet ready to establish a derivatives exchange
which would be considered to be successful. Although Kenya is not yet ready to
establish a derivatives exchange} measures can be put in place to facilitate the process
of getting ready. Economic development and political stability may not be changed as
easily} however putting in place the required regulatory framework and infrastructural
systems and encouraging greater capital market development can be embarked on. This
paper contributes to the body of literature by documenting the factors necessary for
establishing a successful derivatives exchange in Kenya.
Description
Submitted in partial fulfillment of the requirements for the degree of Master of Commerce
Keywords
Derivatives market, Derivatives exchange, Kenya