Brokers rush for automated trade to win clients

The launch of online trading systems by CFC Stanbic Financial Services and Suntra Investment Bank has triggered a race towards automated stockbrokerage, with at least three players planning to set up similar systems early next year.

It is expected that the shift by stockbrokers to internet-based trading, which allows investors to buy and sell shares on their mobile phones and computers, will shorten transaction cycles, cut operating costs and increase trade volumes by attracting more investors to the market, industry players said.

African Alliance Securities and Faida and Drummond Investment banks said they plan to launch online trading platforms early next year, terming the shift inevitable for brokers.

“Market players will have no choice but to create systems that allow clients to operate from home and offices,” said Faida Investment Bank chief executive Bob Karina, adding that online trading will save brokers the costs of opening new branches and other costs of reaching clients.

Mr Karina said they had contracted information technology company Tangaza to design an online trading system similar to Suntra’s.

Drummond Investment Bank executive director King’ori Githinji said improved internet speeds and reduced internet connection costs have catalysed this growth.

Mr Kithinji said Drummond already offers some online services such as taking client orders through e-mails linked to investors’ accounts.

Mr Otieno said access to the back office system will reduce the settlement cycle to real time trading.

It currently takes as much as seven days to complete a transaction involving buying or sale of shares and receipt of funds.

Suntra Investment Bank chief executive Michael Gichohi who is also the chairman of the Kenya Association of Stockbrokers Investment Banks said online trading may revolutionalise share trading, similar to the transformation in the mobile phone industry after the launch of the money mobile transfer service a few years ago.

“No one imagined M-Pesa would be as big when it was started,” quipped Mr Gichohi.

Kenyans are fast embracing technology. Mobile phones with applications such as money transfer services have become basic services.

The automated trading systems (ATSs) are intended to enable online trading via mobile phones.

There are an estimated 19 million mobile phone subscribers in Kenya with 13.5 million using the M-Pesa money mobile transfer service by Safaricom.