Investors can now buy and sell the same company shares several times during a single day taking advantage of small price movements.
The Nairobi Securities Exchange (NSE) finally launched day trading on Monday, two years after setting up a system that separates trading and post-trading activities hence allowing for trading positions several times during the day.
The move is welcome news for investors and traders looking to make gains from small price movements and timely events that can sway share prices.
It will also help the NSE increase revenues from commissions charged on transactions by an increase in turnover.
The regulator has set a discount on the second leg of the transaction which will be levied at 0.114 percent compared to normal trades which are levied at 0.12 percent.
“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 Mr Geoffrey Odundo the Chief Executive, NSE.
Experts say same-day trading and settlement would deepen liquidity on the bourse which reduced in the third quarter to a ratio of 1.1 percent compared to 1.41 percent in the preceding quarter according to the Capital Markets Authority (CMA).
Despite that, the market has been on a slow recovery with much activity attributable to blue-chip stocks like Safaricom, the banking counters, East African Breweries, and British American Tobacco coupled with increasing investor interest in alternatives especially fixed-income investments.
NSE reckons the successful rollout of the new initiatives is tipped to firm up the rebound of the NSE after the drastic impact of the COVID-19 pandemic.
The NSE 25 Share Index hit a 12 month high of 4,075 points in August this year recording a record market capitalization of Sh2.9 trillion.
The increasing market activity is an indicator that the companies listed at the Exchange are growing steadily and a reflection of the positive future outlook across the various sectors in the economy.