NSE reviews spreads for share price movement

The Nairobi Securities Exchange (NSE) #ticker:NSE has reviewed the price movement spreads for shares, with the smallest possible movement for stocks priced below Sh5 now set at one cent from the previous five cents.

In the revision done on Tuesday, the bourse has increased the price bands for bidding and dealing spreads to six, up from the previous four.

The spreads determine the amount of value at which a stock moves up or down in trading between bids, up to a maximum of 10 per cent on the previous day’s closing price.

Stocks priced below Sh5 will now see a bid spread of one cent, while those priced between Sh5 and Sh10 will enjoy a spread of two cents.

Shares trading at between Sh10 and Sh50 will enjoy a bidding spread of five cents.

Enhance liquidity

Under the previous rules, stocks trading below Sh20 had a spread of five cents, with those trading at between Sh20 and Sh50 moving up or down in lots of 25 cents.

“This will increase the depth of the order book and enhance liquidity. It also allows counters that are trading below Sh1 to operate within the 10 per cent range based on the previous price,” said the NSE.

The changes take effect from tomorrow.

For shares priced between Sh50 and Sh500, the price movement has been set at Sh0.25 between bids, while for those between Sh500 and Sh1000, movement has been set at Sh1.

Shares priced above Sh1000, of which there is only the seldom traded Kurwitu Ventures and the Barclays NewGold ETF at the NSE, price movement will be in lots of Sh5 between bids.

Previously, shares priced between Sh50 and Sh100 moved up or down by Sh0.50 between bids, while all stocks priced above Sh100 were moving up or down by a shilling