The Nairobi Securities Exchange (NSE) amended its trading regulations to accomodate block trades, aiming to boost market liquidity.
A block trade is a large securities transaction privately negotiated and arranged away from public markets to minimize its impact on the security price.
At the NSE, block trades must either involve the sale of shares valued at over KES 3 billion, making up 5% or more of the issuer’s total issued shares with a maximum of 24.99%, or shares valued at less than KES 3 billion, making up more than 15% of the issuer’s total issued shares with a maximum of 24.99%. If a block trade is conducted outside the 30% price range, the trading participant must obtain approval from the NSE before execution.
The Nairobi Securities Exchange said it amended its trading rules to increase market transparency and provide more flexible pricing provisions based on a one-month average.
The NSE CEO, Geoffrey Odundo, stated that this decision was made due to increased block trades and the desire to follow international best practices.
Geoffrey Odundo noted that the Block Board adheres to the best practices in international exchanges. As per the block trade guiding rules, it will report block transactions as off-market transactions, except for their impact on the total market turnover.
Additionally, block transactions can be settled without payment, provided that the parties involved have given their consent, which must be filed with the Central Depository & Settlement Corporation (CDSC) before the completion of the transaction.