Brokers face stiff penalty for ‘naked’ short selling, warns CMA

Stockbrokers at the Nairobi Securities Exchange . FILE PHOTO | NMG

Stockbrokers have to do due diligence or face penalties if they allow ‘naked’ short selling, the Capital Markets Authority (CMA) has said.

Brokers have been complaining the new Nairobi Securities Exchange (NSE) platform removed a system that verified whether a trader had the actual shares they were short selling—selling of borrowed stock for return later — creating a loophole allowing sales by those without specified numbers.

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