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 Kshs. 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 Kshs. 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.
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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. This has necessitated the need for the NSE to accommodate such transactions which may be prearranged by the parties involved.”
said Mr. Geoffrey Odundo, Chief Executive, NSE.
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The block Board is guided by international best practices in other exchanges and is expected to drive more liquidity in our market.
The new provision captured under clause 6.5.3 of the NSE trading Rules is highlighted here under for ease of reference.