Stockbrokers reject verbal sell or buy orders

Published on 13/02/2009

By James Anyanzwa

Investors have been advised to stop placing buy-and-sell orders for shares by word of mouth.

Brokers and investment bankers on Friday said the common practice was a violation of the trading regulations.

“Our advice is that from now on all orders must be written and the CMA Act followed to the letter,” said Jane Njeru, chief executive of the Kenya Association of Stockbrokers and Investment banks.

The Capital Markets Authority Act states that any licensed person, broker or dealer shall not transfer any securities without the customer’s written consent.

“It is, therefore, upon an investor to ensure that all dealings with the broker or authorised agents is in written form to ensure protection in the event of fraudulent activity on the central depository system account,” said Njeru.

She said the present difficulties facing a few stockbrokers was mainly linked to the Safaricom IPO, whose process is yet to be concluded more than six months after the shares begun trading at the bourse.

She said while attempts have been made at reconciling accounts with Citibank, the principal receiving bank, the process has been slow and cumbersome.

Njeru said expeditious conclusion of this reconciliation process will enable stockbrokers and investment banks receive the IPO refunds and restore their liquidity positions.

She said the prevailing bear run at the NSE is a temporary phenomenon and is not directly related to trading strategies or fraudulent activities within the brokerage firms.

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