Day Trading Implementation: A first In East Africa

By Soko Directory Team / Published December 24, 2021 | 6:26 pm




KEY POINTS

On the 22nd of November 2021, the rollout of Day Trading went live on the Nairobi Securities Exchange (NSE), as part of its strategy to enhance market liquidity.


Corporate Bonds Stocks are a popular avenue for investment, but it’s far from the only option. Depending on your needs, income and when you’ll need to access the money, you can take advantage of a variety of different investment strategies

KEY TAKEAWAYS


So, what is Day Trading? It is the purchasing and selling (or vice versa) of the same security within a single day, trading session, or multiple times a day. 


By Moses Njuguna – Vice President, Research, EFG Hermes Kenya

On the 22nd of November 2021, the rollout of Day Trading went live on the Nairobi Securities Exchange (NSE), as part of its strategy to enhance market liquidity.

The NSE received regulatory approval from the Capital Markets Authority (CMA) on the 26th of October 2021. This rollout has come on the back of investment in new technology (trading system) in October 2019 by the NSE to enable the separation of the trading and posting activities that will support the introduction of more products such as Covered Short Selling, in addition to Day Trading.

Furthermore, as a means to complement this milestone, the NSE Board approved an incentive structure whereby investors who participate in Day Trading will receive a discount on the second leg of the transaction at 0.114% (5% discount) for the NSE levy. This is part of NSE’s 2020-2024 strategy to deepen the Kenyan Capital markets.

So, what is Day Trading? It is the purchasing and selling (or vice versa) of the same security within a single day, trading session, or multiple times a day. Day Trading is very popular in the developed world and can be traced back to 1867, way before the emergence and rise of computers or the internet, as the telegraph communication technology was used to create the first ticker tape.

Despite this, Day Trading gained popularity in 1975 post the deregulation of commissions by the US Securities and Exchange Commission (SEC) that declared fixed commission rates as illegal leading to significant declines in commissions. Today, most orders or trading platforms in the US are commission-free e.g. Robinhood. Day Traders are mainly individuals, not institutional investors, assumed to be well informed to undertake such trades based on the identification of material information that will move the stock. Additionally, they can use leverage to capitalize on small price movements that occur in highly liquid stocks.

We applaud the NSE’s keenness to introduce new products as a means to deepen the local capital markets and as an industry player, we are eager to aid in developing our markets.  Day Trading is driven by informed investors in a low-cost environment in the developed world, as highlighted above. In Kenya, the current broker commission rates are negotiable with a maximum of 1.76% applicable to amounts up to KES100,000 (cUS$885) and a 1.36% ceiling on amounts above KES100,000 (approx. US$885), according to the NSE.

The Author is Mr. Moses Njuguna – Vice President, Research, EFG Hermes Kenya




About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

View other posts by Soko Directory Team


More Articles From This Author








Trending Stories










Other Related Articles










SOKO DIRECTORY & FINANCIAL GUIDE



ARCHIVES

2022
  • January 2022 (206)
  • 2021
  • January 2021 (182)
  • February 2021 (227)
  • March 2021 (325)
  • April 2021 (259)
  • May 2021 (285)
  • June 2021 (273)
  • July 2021 (277)
  • August 2021 (233)
  • September 2021 (271)
  • October 2021 (305)
  • November 2021 (365)
  • December 2021 (250)
  • 2020
  • January 2020 (272)
  • February 2020 (310)
  • March 2020 (390)
  • April 2020 (321)
  • May 2020 (335)
  • June 2020 (327)
  • July 2020 (333)
  • August 2020 (276)
  • September 2020 (214)
  • October 2020 (233)
  • November 2020 (242)
  • December 2020 (187)
  • 2019
  • January 2019 (251)
  • February 2019 (215)
  • March 2019 (285)
  • April 2019 (254)
  • May 2019 (271)
  • June 2019 (250)
  • July 2019 (338)
  • August 2019 (293)
  • September 2019 (306)
  • October 2019 (313)
  • November 2019 (362)
  • December 2019 (319)
  • 2018
  • January 2018 (291)
  • February 2018 (213)
  • March 2018 (276)
  • April 2018 (223)
  • May 2018 (235)
  • June 2018 (176)
  • July 2018 (256)
  • August 2018 (247)
  • September 2018 (255)
  • October 2018 (283)
  • November 2018 (283)
  • December 2018 (184)
  • 2017
  • January 2017 (183)
  • February 2017 (194)
  • March 2017 (207)
  • April 2017 (104)
  • May 2017 (169)
  • June 2017 (205)
  • July 2017 (190)
  • August 2017 (195)
  • September 2017 (186)
  • October 2017 (235)
  • November 2017 (253)
  • December 2017 (266)
  • 2016
  • January 2016 (165)
  • February 2016 (165)
  • March 2016 (190)
  • April 2016 (143)
  • May 2016 (245)
  • June 2016 (182)
  • July 2016 (271)
  • August 2016 (247)
  • September 2016 (234)
  • October 2016 (191)
  • November 2016 (243)
  • December 2016 (153)
  • 2015
  • January 2015 (1)
  • February 2015 (4)
  • March 2015 (165)
  • April 2015 (107)
  • May 2015 (116)
  • June 2015 (119)
  • July 2015 (147)
  • August 2015 (157)
  • September 2015 (186)
  • October 2015 (169)
  • November 2015 (173)
  • December 2015 (207)
  • 2014
  • March 2014 (2)
  • 2013
  • March 2013 (10)
  • June 2013 (1)
  • 2012
  • March 2012 (7)
  • April 2012 (15)
  • May 2012 (1)
  • July 2012 (1)
  • August 2012 (4)
  • October 2012 (2)
  • November 2012 (2)
  • December 2012 (1)
  • 2011
    2010
    2009
    2008
    2007
    2006
    2005
    2004
    2003
    2002
    2001
    2000
    1999
    1998
    1997
    1996
    1995
    1994
    1993
    1992
    1991
    1990
    1989
    1988
    1987
    1986
    1985
    1984
    1983
    1982
    1981
    1980
    1979
    1978
    1977
    1976
    1975
    1974
    1973
    1972
    1971
    1970
    1969
    1968
    1967
    1966
    1965
    1964
    1963
    1962
    1961
    1960
    1959
    1958
    1957
    1956
    1955
    1954
    1953
    1952
    1951
    1950