Capital Markets

CMA eyes waiver of charges to boost day trading uptake

nse

Nairobi Securities Exchange trading floor. FILE PHOTO | NMG

The Capital Markets Authority (CMA) will consider lowering transaction levy for day trading to raise the market activity and local investor uptake at a time the bourse has been recording high foreign investor exits.

CMA says lowering its 0.12 percent fee charged on day trading through Public Offers and Listing of Securities (POLD) draft regulations 2022 will raise market liquidity at the Nairobi Securities Exchange (NSE) that kicked off at a slow start.

Day trading allows investors to buy and sell the same company shares several times during a single day looking to make gains from small price movements, sometimes riding on events that sway share prices.

“The revised POLD regulations have a new provision that allows the waiver of regulatory costs where necessary, CMA Kenya may use this window to further bring down the costs of day trading to promote market liquidity and a general increase in trading activities on the NSE,”’ CMA said in its soundness report.

NSE kicked off day trading last November to boost market turnover and deepen liquidity on the bourse, which has fallen in recent years retaining new listings.

The rollout of the platform, however, started at a slow pace. As a result, NSE offered a five percent rebate on the commissions to encourage uptake, levying 0.114 percent compared to normal trades, which are levied at 0.12 percent.

CMA and Central Depository and Settlement Corporation levies of 0.12 percent and 0.08 percent respectively remained unchanged.

In September, the bourse extended the waiver of its fees on equity day trades, allowing investors to take advantage of continued price changes at a reduced cost.

Data show NSE has recorded a cumulative turnover of Sh3.8 billion in buy and sell of day trades, which translates to an average of 2.2 percent of the monthly market activity.

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