Do you hate waiting for your money to clear through long bank or stock exchange procedures? If you do, join my league. I am a keen believer in getting my money as soon as I sell or transact. I have not always had my way but prospects are looking bright.
Beginning today, you and I will be able to get our money three days after selling our shares at the Nairobi Stock Exchange. This is courtesy of the T+3 system that began operating yesterday. Previously we had the T+4 system where it took four days to get your money after a transaction. T+3 means transaction day and three days. I am sure I don’t have to explain T+4.
I have always wondered why Kenya kept the T+4 system when the global practice is for investors to get their money with even lesser days. I understand that all it took was a few changes in the NSE trading rules and the CDSC operation rules and vulaa! We get our money faster.
Getting your money faster has several advantages.
First it increases both local individual and foreign institution participation in the stock exchange. As an investor, you know that just incase of an emergency you can be able to liquidate your shares and take care of a pressing need. Also, you can re-invest your cash faster and as those of you who trade know, a day can make a big difference in the price of a stock. Ask any Kengen investor in 2006 what difference a day made and you will realize the importance of the T+3 move. For institutional investors holding millions in the NSE, getting your money faster, especially with the volatile shillings, is a key incentive to avoid currency losses.
And with an upcoming British American IPO and NSE listing after its demutualization, this news would not have come at a better time. KUDOS NSE.
Now, I can’t wait for cheque truncation to take effect on August when the process of clearing a cheque will move from four days to one or two days! Goodbye number four.