Thursday, July 14, 2005
One unintended effect of the introduction of CDS (electronic trading) at the Nairobi Stock Exchange is an attempt by people to engage in day trading. Unfortunately, stocks have to be still bought through stock brokers who must make the actual deals on the floor of the exchange. E.g. Someone who requests a broker to sell Kenya Airways at 81 and use the proceeds to buy Mumias at 31 may get mixed results. Sometimes the broker can’t make the deal that day, or for the next few days (in the volume specified), or commits the transaction at a time when the price has changed significantly. Also it is not cost effective, since each transaction costs 2% in commissions.