Kenya: Nairobi Securities Exchange unveils day trading to boost liquidity

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  • Nairobi Securities Exchange (NSE) has launched day trading, allowing investors to buy and sell securities multiple times in a single day
  • The NSE will also use day trading to deepen capital markets when turnover and trading activity have remained flat in recent years

Kenya’s Nairobi Securities Exchange (NSE) has achieved a massive milestone after launching day trading, allowing investors to buy and sell securities multiple times in a single day.

The move by the NSE will also increase liquidity at the exchange.

“Day trading means the buying and selling or selling and buying of shares of the same security on the same account on the same day. Day trading is also called intraday trading,” NSE says on its website.

The Central Depository and Settlement Corporation (CDSC) handles trades under day trading, which provides clearing, settlement, and depository services for listed securities.

According to a report filed by Reuters, the Nairobi Securities Exchange (NSE) is among the biggest on the continent by trading volumes and has 65 listed securities.

It is also popular with foreign investors seeking exposure to growing economies in the region.

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NSE’s Chairman Kiprono Kittony said the NSE would also use day trading to deepen capital markets when turnover and trading activity have remained flat in recent years.

In November, the bourse said it had received a nod from the Capital Markets Authority (CMA) to roll out say trading.

“Day trading is a welcome move for local investors who have previously lobbied for the activation of intraday trading,” NSE Chief Executive Officer Geoffrey Odundo said.

He added that the bourse is confident of bullish market performance in the future on account of day trading.

The Nairobi Securities Exchange (NSE) is among the biggest on the continent by trading volumes and has 65 listed securities / NSE

Guidance manual

The introduction of day trading comes days after the NSE launched its Environmental, Social and Governance (ESG) Disclosures Guidance Manual.

By issuing these guidelines, the NSE said it aims at improving and standardizing ESG information reported by listed companies in Kenya.

The guidelines provide a granular, tactical approach to ESG reporting that meets international standards on ESG reporting.

Further guidance has been provided on how listed companies can integrate ESG considerations into their organizations, helping capture significant opportunities for stakeholders while managing critical business risks.

“Consistent application of these guidelines will help improve the capital markets in Kenya by providing information that investors are now demanding to facilitate decision making and capital allocation.

Commenting on the launch, the NSE Director, Isis Nyong’o Madison noted that the Capital markets can have a decisive impact on the level and direction of sustainable investment and can contribute towards filling the financing gap for the SDGs.

“NSE reiterates its commitment to encourage the incorporation of environmental, social and governance (ESG) factors into investment decision-making. This is a major step towards making finance more sustainable to ensure better allocation and channelling of capital towards sustainable and transitioning assets.”

The NSE, the fourth Exchange in Africa to launch an ESG Guidance manual, collaborated with the Global Reporting Initiative (GRI), a provider of the global best practice for impact reporting in integrating sustainability and ESG disclosures in Kenya’s Capital Markets.

Interest by investors and other stakeholders in ESG matters has surged, with the modern investor in the capital markets being more discerning and demanding more disclosure from companies.

The COVID-19 pandemic, global environmental and social crises, the transition to renewables, and the renewed focus on human rights have intensified corporates’ need and drive for ESG integration.

“Over time, and with improved maturity on ESG disclosures, stakeholders will be able to correlate financial performance with specific ESG indicators such as diversity and air emissions, as well as compare the ESG performance of organizations reporting within the same sector,” noted Odundo.

NSE’s decision to support companies by issuing guidelines for reporting on ESG matters is a proactive step towards supporting listed companies to attract more foreign and domestic capital in the future.

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Wanjiku Njuguna is a Kenyan-based business reporter with experience of more than eight years.

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