Tuesday’s trade system hitch at the NSE that took out half a day of trading is a bad signal to both local and international investors, who rely on the smooth working of the market to make money.
A system breakdown every now and then has become a familiar story at the stock market, raising questions as to why the bourse has not taken steps to find a permanent solution to this problem.
Kenyans have invested their hard-earned cash in the market hoping for a return, meaning that any time trading at the bourse is stopped, someone is losing an opportunity to make money.
The market is also underwritten by the knowledge that there will be liquidity in case someone needs to exit, and if this is lost due to downtime it can turn off investors. The system outages also do not augur well for a market that is gearing itself towards trading in derivatives, some of which require on-the-spot decisions throughout a trading day in order to make sense.
Investors deserve transparency whenever there is a problem with the trading system.
Whether the outage is at the bourse or affects market intermediaries, transparency and swift action is necessary to allay any emerging concerns whether trading is safe from manipulation, and that their shares that are now traded electronically are safe. It is about time the NSE came up with a proper backup to its system to prevent further downtime in trading.