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East Africa prepares for automated stock trading system

The East African region is expected to adopt an automate d trading system, linking the stock markets in the five countries in the region,

as part of the economic integration, the Nairobi Stock Exchange (NSE) chairman J a mes Wangunyu said here Thursday.

In a move aimed at encouraging the regional financial and capital market players to gain access to a larger regional market, the Association of the Stock Exchan g es in East Africa is planning to link the various stock markets through the Auto m ated Trading System, which allows for wide area network trading.

This means that stockbrokers from Kenya, Uganda, Rwanda, Burundi and Tanzania ca n buy and sell shares on behalf of their customers from the comfort of their off i ces, easing the problem of traveling.

The move is also aimed at encouraging cross-listing of shares across the various security exchanges in the region.

The NSE has the most vibrant automatic trading system.

The automated trading system allows the stockbrokers the flexibility of ordering for shares from their offices without having to make a physical presence at the

trading floor where previously, the brokers had to receive the orders physically .

“We are looking at linking the region through the ATS to allow them to trade fro m the comfort of their offices,” Wangunyu said.

The NSE official was speaking in Nairobi during the launch of the Cooperative Ba nk of Kenya’s Initial Public Offer (IPO), which opened here Thursday.

The bank is expected to bolster trading at the NSE.

Wangunyu said the stockbrokers and other firms trading under the license of the bourse had been put under strict surveillance of the bourse to stop chances of f a ilures in the system.

Kenyan investors have recently been treated to an array of stock market failures following the collapse of three stockbrokerage firms in a span of one year.

Francis Thuo and Partners collapsed in the second part of 2007 and was initially de-listed after it was found to have violated the ethics of trading.

The rogue stockbroker used the funds of its investors without their knowledge an d later collapsed.

Discount Securities, also a major firm in the stockbrokerage business, was also put under the management of an accounting firm after it failed to adhere to prud e nt management requirements.

Wangunyu said the NSE was on its toes and that led to the early discoveries of t he various weaknesses.

Meanwhile, the Capital Markets Authority (CMA) has warned that a loss of investo r confidence might be dangerous for the entire stock market.

“The market confidence should be our most prized commodity, any perception that the playing field is not level might be very detrimental,” said Waruinge, chairm a n of CMA.

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