CMA to suspend day trading fees for uptake

The Capital Markets Authority (CMA) will occasionally suspend part of day trading fees in an attempt to spur activity in the market segment.

The step is expected to make up part of the amendments to the Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations.

“We are stepping up reforms to make sure this particular initiative works. In the public offers and listings regulations which we have amended, we have a provision which says the CMA may vary some costs depending on circumstances such as the state of the economy,” said CMA director for policy and market development Luke Ombara.

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Day trading transaction fees tally to 0.2114 percent including a 0.0114 percent levy chargeable by the Nairobi Securities Exchange (NSE) inclusive of a five percent rebate, a 0.12 percent CMA levy and a 0.08 percent levy payable to the Central Depository and Settlement Corporation.

According to the CMA, the fees on day trading are high and are likely inhibitive.

So far, only the Nairobi Securities Exchange (NSE) has varied the day trading fees having waived the exchange levy on all equity day trades between July and December last year in a move that was aimed at facilitating investors in enjoying access to higher liquidity.

“The NSE attempted to address the issue of cost by providing a rebate as a player in the private sector. When it comes to the CMA, we consider all fees that are specified in all the relevant schedules,” Mr Ombara added.

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According to the bourse, day trading contributed to two percent of the total equities turnover in 2022 and is expected to rise to five percent this year.

The NSE launched day trading in December 2021 as part of its strategy to enhance market liquidity.

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