Nairobi Securities Exchange (NSE) Plc has reduced transaction fees by five percent for equity investors who adopt the same-day trading model.
The stock market is preparing for the implementation of a Day-Trading model in stock trading in the latest attempts to entice investors and new companies to list.
The stock market is plagued by investor apathy, a lack of new listings and unscrupulous brokers preying on unsuspecting investors through insider trading.
The latter measure is designed to enhance market liquidity, with the buying and selling or selling and buying of shares of the same security on the same account being done on the same day, also known as intraday trading. However, the cash settlement of traded shares will still be made on the current T + 3 cycle where payment is made three days after the trade.
Under guidelines approved by the Capital Markets Authority (CMA) on October 21, rebates, calculated as a percentage of trade levies, will be offered to investors on clearing positions created on the same day.
According to the rules, the NSE levy of 0.12% will be reduced to 0.114% of the transaction value after the applicable discount of 5%, while the direct debits of the CMA and the Central Depository and Settlement Corporation of 0.12 % and 0.08% respectively will remain unchanged. The guidelines state that only trades executed on the same day for the same security on the same Central Depository System account with a single broker will be eligible for selection as daily trades.
Efforts to elicit comment from NSE CEO Geoffrey Odundo were unsuccessful as he did not respond to our email questions when it came time to press.
The stock market, home to 66 listed companies, some of which have been suspended and delisted, is struggling to regain the lure that faded into the air after Safaricom’s initial public offering (IPO) fiasco in 2008 which took attracted over 742,000 new investors to the market.
Many took out bank loans and sold personal properties to participate in the 10 billion stock offering which then backfired after the stock price fell below the IPO price. of 5 Ksh ($ 0.04) per share, which has caused many investors, especially small and individuals, to flee the market. .
The NSE 20 equity index, a key market performance indicator, more than doubled to 1,866.97 on November 24, from 5,444.83 in 2007.
Investor accounts stagnated at around 1.5 million of which 1.13 million were active last year, following increased awareness campaigns urging stock market investors to activate dormant accounts.
An attempt by the NSE and CMA to jumpstart the market recovery through new products such as real estate investment trusts, exchange traded funds, derivatives, securitization, deposit notes and global receipts, securities lending and borrowing have failed to attract new investors to the market.
According to the CMA, the worrying stock market situation has been compounded by competing short-term investment opportunities, including mobile money products, sports betting and government securities.
On the other hand, potential issuers have been kept out of the market due to high listing costs and disclosures, a tough macroeconomic environment leading to declining stock prices and the proliferation of companies. private equity firms that provide virtually free and easily accessible capital to SMEs. , with the added benefit of improving the professional management and governance of these companies
The risk exposure of potential issuers to post-offer / quote price correction and in some cases complete price collapse despite professional valuation has also been identified as a barrier to entry. new companies in the market.
According to the CMA market, concentration also remains a major risk, the top five companies representing more than 80% of the total turnover of the market on the stock exchange, the mobile operator Safaricom representing in some cases 60% of the share. Steps.