It’s time for three-day equities settlement cycle to be retired

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Nairobi Securities Exchange trading floor. PHOTO | NMG

A few days ago, Robinhood, US-based commission free stockbroker, took a lot of flak when it decided to restrict trading of some shares on its platform.

Their reason; the extra volatility in share prices meant they had to hold more capital at the institutions that clear their trades. In other words, they had to raise margin for trading on these shares, which required more cash be set aside after each trade.

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Note: The results are not exact but very close to the actual.