Sharing is Caring

Kenya is known globally for its young population, improving infrastructure and diversified economy.

Stock trading in Kenya like Nairobi Securities Exchange is affected by financial instability. This is a chance for investors to enter into the market for long-term investments.

Many people have been asking me how to get started in the world of stock trading. The following tips will help you get started:

  1. Bulletproof your finances

Stock trading is known to be one of the best ways to build wealth. Note that good returns are not guaranteed. One sure thing is volatility.

Always spend less than you earn every month.

Pay off all the high-debt-interest debts.

Have an emergence fund equivalent to a minimum of six months of living expenses.

Once you have the above issues sorted, then you are ready to dive into stock trading at the Nairobi Securities Exchange.

  1. Identify a Broker

Open an account with a licensed broker. Currently, there are over 20 brokers working on the NSE bourse. There are a couple of stoker brokers who offer online trading services. This makes it possible for investors to buy and sell stocks from any part of the world.

Below is a list of stockbrokers in Kenya which offer online trading at Nairobi Securities Exchange:

  • Faida Investment Bank
  • Suntra Investment Bank
  • AIB Capital
  • NIC Securities
  • Genghis Capital
  • Dyer & Blair 
  • Faida Investment Bank 
  • Kingdom Securities 
  • SBG Securities 
  1. Compare the fees

Almost all stock brokers charge fees for opening and maintaining an account. There is no fixed amount charged for these fees. It rotates around Ksh. 1,200 to open an account and approximately Ksh. 100 to keep it active. That is a total of Ksh. 2,400 per year to operate a CDS account.  

There is no minimum amount required to operate a CDS account but once you open one, it’s mandatory for you to buy a minimum of 100 shares.

Therefore, if you want for example to buy shares of a company trading at Ksh. 50 per share. You will be required to spend Ksh. 50,000 plus stockbroker commission and fees on each and every trade that you execute.

4.0 Commission

The commission rate is the same for all stockbrokers. It’s 1.78% of the total value of the trade for transactions less than Kh. 100,000. For transactions more than Ksh. 100, you pay 1.50% in commissions.

5.0 Required Documents

To open a CDS account, provide your broker with:

  1. 2 color passport size photos
  2. A signed CDS-1 Form
  3. You national ID card or passport

In addition to the three requirements above, some stockbrokers will ask you to submit a copy of your Kenya Revenue Authority PIN certificate, the first page of your bank statement and a copy of your recent utility bill.

Once you have all those documents, you will be the owner of a brand new CDS Account.

CDS is an electronic account which reflects all the shares that you own. This is a portfolio.

The good thing is that you can move the CDS account from one stock broker to another. All the shares that you have bought over time move along with it.

This means that if you are not satisfied with the services of your stockbroker, you can leave them.

After setting up a CDS account, your stockbroker will guide you in funding it and start buying shares.

6.0 CDS Account Holder who live in Diaspora

If you are an investor who lives outside Kenya, it will be a challenge for you to collect your dividends. This is because companies trading on Nairobi Securities Exchange (NSE) deliver dividends through direct deposit into bank accounts. Others provided cheque written in Kenyan shillings.

The banks in Kenya demand that you appear in person in order to open a bank account in Kenya. Therefore, if you are not planning to visit Kenya any time soon, inform your stockbroker that you need to open a nominee account. This will make it possible for the broker to collect the dividends on your behalf then deposit them into your trading account.

Up to this point, I am sure you know what to do to start trading shares at the NSE. It now remains upon you to start trading.

7.0 Quizzes

If you have any other question, ask it in the comments section. We will be glad to assist you.

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