The Nairobi Securities Exchange (NSE) has rolled out a new high-speed trading model to lure back international investors, marking a critical step in its fight against dwindling foreign capital. In a landmark move, Absa Securities Kenya successfully executed the first-ever trades routed directly from South Africa, signaling a new era for market access.

This initiative, known as 'sponsored access', is the NSE's direct answer to a troubling trend: foreign investor participation has plummeted to 15-year lows, threatening market stability and liquidity. The new system provides a faster, more efficient pathway for approved foreign institutions to trade on the bourse, a core part of the exchange's strategy to reclaim its status as a premier regional financial hub.

A Direct Pipeline for Capital

So, how does it work? Sponsored access allows large foreign investors, like pension funds or asset managers, to send their buy and sell orders straight to the NSE's trading engine using the credentials of a local sponsoring broker. This bypasses the slower, traditional process, enabling near-instantaneous trade execution vital for high-volume players. The model is provided for under Guideline 4.8 of the NSE’s Direct Market Access Guidelines, 2019.

Merlin Rajah, Head of Electronic Sales at Absa CIB, noted the move is a “powerful signal of investor confidence and technological readiness.” He emphasized that it helps create “more efficient and transparent pathways for investors to participate in African capital markets.”

Battling a Foreign Investor Exodus

The urgency for such reforms is clear. Foreign participation at the NSE fell to just 28% in September 2025, a steep drop from nearly 60% earlier in the year. This capital flight has been driven by a combination of factors, including currency volatility and higher returns in developed markets like the US. In the last quarter of 2024 alone, the market saw a net outflow of KES 16.6 billion from foreign investors, largely linked to political instability.

For the average Kenyan, a sustained withdrawal of foreign funds is not just a headline. It impacts the stability of the shilling, the ability of local companies to raise capital for expansion—which creates jobs—and the overall health of the pension funds that millions of Kenyans rely on. A liquid and stable stock market is a crucial barometer of economic confidence.

The NSE's leadership believes technology is the key to turning the tide. By modernizing its infrastructure, the exchange aims to:

• Boost Liquidity: Make it easier to buy and sell shares quickly.
• Attract Institutional Money: Appeal to large, sophisticated investors who require high-speed execution.
• Enhance Competitiveness: Solidify Nairobi's position against other African financial hubs.

While this technological leap is a significant step, analysts remain watchful. The success of sponsored access will depend on whether it, combined with other market reforms and a stable economic environment, is enough to convince global investors that the potential rewards in Kenya once again outweigh the risks.