Kenya’s Bourse Rolls Out Day Trading, to Enhance Market Liquidity

Investors trading on the Nairobi Securities Exchange (NSE) can buy and sell shares of any listed company within a single trading day. 

This is after the Kenyan bourse received approval from the Capital Markets Authority (CMA). 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 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,” said Geoffrey Odundo, chief executive at the NSE.

Investors participating in day trades will receive a discount on the second leg of the transaction, which will be levied at 0.114 per cent compared to normal trades, which are levied at 0.12 per cent.

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.

The NSE Chairman Kiprono Kittony says day trading will allow investors to trade on one position twice or thrice daily. 

“This will significantly increase turnover and attract more investors to the bourse,” said Kittony.

The NSE, in October 2019, commissioned a new trading system that allowed for the separation of the trading and post-trading activities.

“Looking forward, we expect to see increased turnovers and enhanced market liquidity following the rollout. Investor education remains key to the program’s success. Day trading requires various strategies coupled with trading discipline to hedge from psychological biases that may arise,” Genghis Capital said in its Cross-Asset Weekly Strategy dated 1st November 2021.

Updated with the Genghis Capital commentary.