Connect with us

Hi, what are you looking for?

Capital Business
Capital Business

Kenya

NSE urged to start Day Trading

NAIROBI, Kenya Oct 4 – The Nairobi Stock Exchange is being urged to introduce Day Trading in the equities market to facilitate buying and selling of shares within one day.

Speaking to Capital Business, the Director of Investment Banking at Standard Investment Bank, Amish Gupta, said the system would allow investors to trade several times in one session and settle a net position with their stockbroker at close of business.

Currently, equities settlements are completed after four days (T+4) from the day of purchase, limiting the number of times an investor can trade.

The new proposal is expected to ensure faster settlements, with Mr Gupta arguing it will ultimately lead to increased volumes at the bourse making the stock market more attractive to investors.

“We need the regulators, Nairobi Stock Exchange (NSE), Capital Markets Authority and the Central Depository and Settlements Corporation to initiate a process that will lead to it (Day Trading) and increase the level of activity in the equities market,” Mr Gupta said.

According to NSE Chairman Eddy Njoroge the equities market had traded Sh77 billion by the third quarter, compared to Sh38 billion in 2009.

Mr Gupta however believes automation of trading in equities could double the figure substantially citing an example of the bonds market, which after automation has traded Sh361 billion.

“The question is not that we are doing better than last year; the real question should be why we are not doing as well as the bonds market. It all boils down to faster settlements where you trade and settle on the same day,” he said.

Due to the nature of Day Trading, it is not considered as a long-term investment tool.  Mr Gupta however says the fine line between investment and trading is slowly being broken as investors look to realise faster returns.

Advertisement. Scroll to continue reading.

“What is the bottom line? A return on investment, which you can make from trading or investing. The only difference is that they have different strategies with one (day trading) focusing on capital gains while the other one is focused on capital gains plus dividend yield over time,” he said.

With its introduction, he believes it gives investors the option of splitting shares between short and long term.

Because of the nature of financial leverage and the rapid returns that are possible, day trading can be either extremely profitable or extremely unprofitable, and high-risk profile traders can generate either huge percentage returns or huge percentage losses.
 

Click to comment
Advertisement

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Headlines

NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...

Kenya

NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...

Coronavirus

NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...

Coronavirus

NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...