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 January 30, 2023.
Block trades shall constitute the sale of shares whose value exceeds Ksh3 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 Ksh3 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. As such the new provision has provided for more flexible pricing provisions
that allows for a 30% price range based on a one-month average,” NSE said in a statement.
There shall be a separate board to be known as the Block Trades Board on which all Block Trades shall be recorded.
Where a Block Transaction is concluded outside the 30% range, the trading participant(s) shall seek approval from the NSE before the transaction is executed in the alternative trading system (ATS).
According to the new rules, the NSE shall report Block Transactions as off-market transactions and shall not affect the market statistics with the exception of the total market turnover.
Block transactions may be settled Free of Payment. Where the parties have consented to settle Free of Payment, such consent shall be filed with the CDSC for action before the transaction is concluded
“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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