Short selling receives green light in Kenya
16 January 2018 Nairobi
Image: Shutterstock
Kenya’s Capital Markets Authority (CMA) has given the green light to the Nairobi Stock Exchange (NSE) to launch a short selling and supporting securities lending facility.
The short selling facility is expected to boost liquidity in the Kenyan capital market and also attract investors.
Although progress was made to develop a securities lending and short selling infrastructure in 2017, no specific timeline was offered on when trading will be avaliable.
The move was driven by recommendation of a 2015 World Bank study on the state of liquidity in Kenya that proposed several measures to improve liquidity, including the introduction of securities lending.
Paul Muthaura, CEO at CMA, said: “Making the Kenyan capital markets highly vibrant and liquid is a key priority for the capital markets industry and the securities lending, borrowing and short-selling regulations are expected to facilitate this.”
Some of the elements of the World Bank report were the introduction of market makers, removal of pre-funding and pre-validation checks, the launch of circuit breakers instead of price bands, securities lending and short selling.
Muthaura explained that in the pursuit of this mandate, CMA has been implementing regulatory reforms as well as introducing new products and services aimed at deepening, diversifying and strengthening the securities industry.
The short selling facility is expected to boost liquidity in the Kenyan capital market and also attract investors.
Although progress was made to develop a securities lending and short selling infrastructure in 2017, no specific timeline was offered on when trading will be avaliable.
The move was driven by recommendation of a 2015 World Bank study on the state of liquidity in Kenya that proposed several measures to improve liquidity, including the introduction of securities lending.
Paul Muthaura, CEO at CMA, said: “Making the Kenyan capital markets highly vibrant and liquid is a key priority for the capital markets industry and the securities lending, borrowing and short-selling regulations are expected to facilitate this.”
Some of the elements of the World Bank report were the introduction of market makers, removal of pre-funding and pre-validation checks, the launch of circuit breakers instead of price bands, securities lending and short selling.
Muthaura explained that in the pursuit of this mandate, CMA has been implementing regulatory reforms as well as introducing new products and services aimed at deepening, diversifying and strengthening the securities industry.
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