A stockbroker by definition is anyone who buys and sells securities on a stock exchange on behalf of clients.
With that said, the Kenyan stock exchange is referred to as the Nairobi Stock Exchange ( NSE ) whose major function is to aid Kenya’s growth by encouraging savings and investment in addition to assisting local and international companies access cost-effective capital.
However, in-order to participate in the stock exchange for someone new to trading, one may require a reliable stock broker to make sound decisions on behalf of the client. Below, we offer tips on how to select a stockbroker in Kenya.
1.Should be licensed.
As earlier highlighted, the NSE is the authoritative body mandated by the Capital Markets Authority ( CMA ) to provide a trading platform for listed securities and overseeing its member firms.
With that in mind, stock brokers need to have the necessary licenses required to participate in the NSE as well have the relevant infrastructure to accommodate online trading.
A good online stock broker should provide a sufficient experience to the client in terms of a user-friendly interface, ready researched market information on stock performance of various companies as well as should be able to take minimal time to execute trades.
Fees are one of the crucial factors when selecting an online broker. Brokers may charge account opening fees or maintenance fees albeit at price variations. It is therefore prudent to select a broker whose fees are cheaper compared to the rest.
Commissions are not uncommon in trading and are charged on all trades executed on platforms. They might also charge additional fees but commission rates are usually standard across all stockbrokers whereby it is 2.1% of the total value of transactions less than KES 100,000 and 1.85% of the total value of transactions more than KES 100,000.
Due to the cap that the NSE has placed on the minimum amount of shares and bonds that an investor can buy on the market, brokers have no option but to restrict minimum shares at 100.
This means that shares are bundled and sold in 100 share lots meaning that one can buy shares either in 100 share lots or in the odd lots through stock brokers.