CMA Reviewing Proposals on Online Trading in Kenya

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The Capital Markets Authority (CMA) is reviewing the proposals by the Nairobi Stock Exchange (NSE) on the implementation of remote trading through a wide area network.

The authority confirmed that the NSE recently submitted for approval the proposed changes to the existing automated trading system (ATS) as well as the trading rules to incorporate remote trading.

Sammy Mulang'a, CMA manager for research and market development told Business Daily that the authority was evaluating the proposals to satisfy itself of their efficacy.

"This should not in any way be construed to mean that the Authority is delaying the process," he said.

But he would not go into details of what stage the review was, not exactly what aspects of the proposals the authority was trying to satisfy.

Mulang'a was responding to concerns raised by the NSE that its plan to trade in stocks online had been held back due to a delay to change rules to allow the new method.The current rules stipulate that stock brokers enter client orders in the system from the trading floor at the NSE.

In a statement, NSE chairman Jimnah Mbaru, had said that remote trading requires a minor change in the trading rules for which an approval was being sought from CMA.

He said the boursewas ready to activate WAN to facilitate remote trading if only the CMA had approved the amended trading rules.

The NSE had earlier indicated that the system would go-live on November 1, 2007 but this deadline was delayed by some technical problems which had been solved.

Mr Mbaru said as part of the preparation process, tests have been conducted for the system functionalities to ensure it works smoothly once it goes live.

A workshop has been held for NSE-member firms and other stakeholders such as the Central Depository and Settlement Corporation (CDSC) and custodian banks to familiarise them with the system.

The implementation of the WAN, which cost Sh35 million is a milestone for the exchange, as it marks the second phase of the ATS implemented in September ,2006.

NSE believes that WAN will help the stock exchange be more efficient since brokers and investment banks will be able to participate in the market without a physical presence on the trading floor.

Business Daily