The Nairobi Securities Exchange (NSE) has received approval from the Capital Markets Authority (CMA) to initiate day trading. The rollout of day trading will go live on 22nd November 2021 as part of a strategy by the bourse 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.
NSE Day trading Discount
The 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% compared to normal trades which are levied at 0.12%.
This benefit will be enjoyed by the investor directly through their trading accounts. The NSE has already set up the platform to ensure this is achieved.
A year ago, the bourse commissioned a new trading system in October 2019 that enabled the separation of the trading and post-trading activities. The separation effectively enables the introduction of new products including Covered Short Selling and Day Trading.
“Day trading is a welcome move for local investors who have previously lobbied for the activation of the intraday trading, as they seek to take advantage of intraday price movements and increase their profit margins. We are confident of a bullish market performance going forward,” said Geoffrey Odundo, the NSE Chief Executive.
The NSE Chairman Kiprono Kittony said day trading will allow investors to trade on one position, two or three times per day. “This will significantly increase turnover and attract more investors to the bourse,” said Kittony.
The introduction of day trading is part of the Nairobi bourse strategic objective to enhance liquidity. It is also part of a plan to increase investor participation in the market.