Kenya’s stockbrokers and investment banks are moving fast to automated systems. They say that the future of stock trading is going to be via the Internet and mobile phone applications, according to a report in the Business Daily newspaper(www.businessdailyafrica.com). Kenyans are fast with technology and moved en masse to leapfrog the rest of the world and adopt new technology for mobile money transfers.
Recently CFC Stanbic Financial Services (www.stanbicbank.co.ke) and Suntra Investment Bank (www.suntra.co.ke) launched automated trading systems (ATSs). African Alliance Securities, Faida Investment Bank and Drummond Investment Bank said they plan to launch online trading platforms early in 2011.
The report quotes Faida Investment Bank Chief Executive Bob Karina: “Market players will have no choice but to create systems that allow clients to operate from home and offices.” He added that online trading will save brokers the costs of opening new branches and other costs of reaching clients. He said Faida had contracted information technology company Tangaza to design an online trading system similar to Suntra’s.
King’ori Githinji, Executive Director at Drummond Investment Bank, reportedly said improved Internet speeds and reduced Internet connection costs have catalysed the growth. He said Drummond already offers some online services, including client orders through e-mails linked to their accounts.
According to African Alliance Securities managing director Lucas Otieno, an important milestone will be when there is connectivity between the stockbrokers’ back-office systems and the Nairobi Stock Exchange (www.nse.co.ke). The NSE is upgrading its back-office system estimated to be complete by the end of the first quarter of 2011 for KSh100 million cost. He said: “Once brokers get access to the NSE back office system then we’ll move to the next level.” He forecast that it could reduce settlement time. According to the report, it takes up to 7 days to complete a transaction including transfer of ownership and receipt of funds.
The paper also quotes Michael Gichohi, Chief Executive of Suntra Investment Bank and Chairman of the Kenya Association of Stockbrokers and Investment Banks that online trading could bring a revolution to share trading: “No one imagined M-Pesa (a mobile money system) would be as big when it was started.”
The move could also open up the stockmarket to a much wider range of participants than the 1.8 million accountholders listed at the Central Depository and Settlement Corporation. The automated trading systems (ATSs) should permit online trading via mobile phones and could attract some of the 19 million mobile phone subscribers in Kenya, of whom 13.5 million use Safaricom’s M-Pesa money mobile transfer service.
Treasury Permanent secretary Joseph Kinyua reportedly warned: “Companies that intend to remain competitive and in business must embrace technology in their processes,” at Suntra’s ATS launch last week.
CFC Stanbic Financial Services managing director Nkoregamba Mwebesa was reported saying the new systems have attracted interest from Kenyans living abroad: “Investors both in the country and those in the diaspora have lauded the launch of the online share trading platform since it provides a convenient and innovative solution to shares trading.” He predicted that online trading will eliminate investor queues in future and all trading will be done without the need to go to brokerage offices.
I am currently reviewing websites in Kenya and checking on progress and the internet is certainly changing things there … quickly. Except in investor relations.Increased incidence of online trading will mean increased online demand for information – except if you assume that investors will trade from a position of ignorance.
I will let you know the result of my latest set of research findings soon. Here’s a post by Tom Minney, a man I follow closely in African markets because he has “an in” into areas of mutual interest. December 29th, 2010 by Tom Minney