It will now be possible to buy and sell shares on the Nairobi Securities Exchange (NSE) on the same day in what promises to unlock trading at the bourse.
This is after the Capital Markets Authority (CMA) gave the NSE its approval to initiate day trading. The rollout of day trading will go live on November 22 this year as part of NSE’s strategy to enhance market liquidity.
Day trading refers to the practice of purchasing and selling a security within a single day or trading session or multiple times over the course of the day.
To complement this milestone, the NSE Board approved an incentive structure whereby investors who participate in day trades will receive a discount on the second leg of the transaction which will be levied at 0.114 percent compared to normal trades which are levied at 0.12 percent.
“This benefit will be enjoyed by the investor directly through their trading accounts. The NSE has since championed the requisite infrastructure enhancements to ensure that this is achieved,” NSE said in a statement on Tuesday.
The bourse said this milestone is a culmination of its investment in technology whereby the NSE commissioned a new trading system in October 2019 that enabled separation of the trading and post trading activities.
“The separation effectively enables the introduction of new products including Covered Short Selling and Day Trading which will revolutionise the capital markets and strengthen NSE’s position as the preferred investment hub in the region.”
NSE boss Geoffrey Odundo said day trading is a welcome move for local investors who have previously lobbied for activation of intra-day trading, as they seek to take advantage of intra-day price movements and increase their profit margins.
“Day trading will allow investors to trade on one position, two or three times per day. This will significantly increase our turnovers and attract more investors to the bourse, further entrenching the NSE as an innovative and transformational Exchange in the region,” NSE Chairman Kiprono Kittony said.
The NSE 25 Share Index hit a 12-month high of 4,075 points in August this year, recording a record market capitalisation of Sh2.9 trillion.
The increasing market activity is an indicator that the companies listed at the Exchange are growing steadily and a reflection of the positive future outlook across the various sectors in the economy.
During Tuesday’s trading, the market turnover retreated to Sh333 million from the previous sessions Sh488 million. The number of shares traded stood at 9.2 million against 12.8 million posted the previous session.
