Analysts back compensation in case of technical hitches at NSE

Written By: Regina Manyara
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Analysts want the Nairobi Securities Exchange to put up a contingency plan that includes compensation in the event of technical glitches that could halt trading activities on the bourse.

This comes in the wake of increased demand as the Nairobi Securities Exchange resumed trading Wednesday morning following a technical hitch that saw trading halted Tuesday at 11.52am.

A system outage left Nairobi Securities Exchange investors staring at losses as trading was halted for about half of the day on Tuesday.

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This made it impossible to buy or sell shares. Speaking to us on phone Steve Biko a research analyst at Soko Directory said: “It was unfortunate for investors and is likely to impact on trading trends in the next two days as those lined up to trade have to go back to the drawing board….there’s need for full disclosure as to the cause of the said technical hitch.’’

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Stockbrokers in particular lose whenever there is limited or no trading, given that they derive their income from the commissions charged on trade.

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Investors who had lined up to trade before the halt were forced to review their trading movement on the platform owing to the day to day price change.

Biko adds “to avoid recurring outages the Nairobi Securities Exchange needs to adopt best practices as well as put in place a compensation strategy that could include a redundancy plan to recover trading days lost.”

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This move is expected to cushion investors from would be losses in the event of a trading halt.

Traders say the trading halt experienced on Tuesday is likely to depress the market numbers for this week.

The Automated Trade System was launched in 2006, replacing the open outcry system that had been in place since the establishment of the bourse.

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