NSE adjusts trading rules to support block trades

NSE Kenya

The Nairobi Securities Exchange (NSE) has amended its trading rules to allow for block trades, following a green light from the regulator Capital Markets Authority (CMA) on 30th January, 2023.

Block trades shall constitute the sale of shares whose value: exceeds Ksh.3 billion in value and constitute 5% or more of an issuer’s total issued shares subject to a maximum of 24.99%; or is less than Ksh. 3 billion in value and which constitutes more than 15% of an issuer’s total issued shares subject to a maximum of 24.99%.

This amendment is premised on the fact that large transactions in the equities market may require other than the current provision that guide price movement as well as the need for real-time reporting of such large transactions in the interest of maintaining market transparency.

As such the new provision has provided for a more flexible pricing provisions that allows for a 30% price range based on a one month average.

”The NSE has noted a trend where there is an increase in block trades and given the inability to conclude such via the normal board, investors have been seeking exceptions for transfer outside the NSE, thereby compromising transparency given that such trades are not reported,”
said NSE CEO Geoffrey Odundo.

This has necessitated the need for the NSE to accommodate such transactions which may be prearranged by the parties involved.”

The block Board, which is guided by international best practices in other exchanges, is expected to drive more liquidity in the local market.

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