Stock traders can make money from very small share price changes by buying and selling company stake at the Nairobi Securities Exchange (NSE) several times during the day.
For example, you can buy Safaricom PLC shares in the morning, and then news comes that the telco has received approval for the M-PESA license in Ethiopia effectively sending share prices soaring.
You can sell these again during the same day unlike before where once you posted a trade you were stuck in the position until the next day of trading.
“Day trading is a welcome move for local investors, who have previously lobbied for the activation of the intraday trading, as they seek to take advantage of intraday price movements and increase their profit margins,” said NSE Chief Executive Geoffrey Odundo.
NSE installed a new system in 2019 which separates trading and post-trading activities hence allowing for trading positions several times during the day.
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The system is now live allowing for much-awaited day trading which could deepen liquidity on the bourse by increasing turnover.
Day trading will help the NSE increase revenues from commissions charged on transactions by an increase in turnover.
The regulator has set a discount on the second leg of the transaction which will be levied at 0.114 percent compared to normal trades which are levied at 0.12 percent.
NSE hopes the rollout of the new initiatives is tipped to firm up the rebound of the bourse after the drastic impact of the COVID-19 pandemic.
The NSE 25-Share Index hit a 12-month high of 4,075 points in August, this year, recording a record market capitalization of Kes2.9 trillion.
The increasing market activity is an indicator that the companies listed at the exchange are growing steadily and a reflection of the positive future outlook across the various sectors in the economy.