* Players expected to move to value added services
* BBO keeps trail of transactions, rogue players
* NSE aiming to recruit more investors
By Beatrice Gachenge
NAIROBI, Jan 27 (Reuters) - Kenyan stock market brokers will need to focus on providing additional services instead of brokering trades when a new online market system goes live in March, the Nairobi Stock Exchange's chief executive said on Thursday.
"Market players can now spend more time on value addition such as research, providing advice to investors and enhancing portfolio management for the investment bankers," Peter Mwangi told Reuters in an interview.
BBO is an online trading platform that will allow investors to access the market in real-time and trade shares directly at their convenience. Brokers offering the online service will still earn commissions on trades.
The new system comes as part of market reforms aimed at restoring investor confidence since several rogue brokerage firms collapsed after trading shares without their clients' consent, causing an uproar in the market.
"This system has better controls and balance against malpractice, improving risk management and easing compliance and surveillance for the NSE and Capital Markets Authority," said Mwangi.
NEW TECHNOLOGY FOR YOUNGER INVESTORS
Kenya's Capital Markets Authority (CMA) last year increased capital requirements to 250 million shillings ($3 million) from 30 million for investment bankers and 50 million from 5 million for brokers to boost investor confidence, effective 2011.
The CMA also established its own anti-fraud unit, which has so far recovered millions of shillings stolen in unauthorised transactions.
It recently posted a list of fraudsters believed to have made away with client's money.
Armed with the BBO system, the NSE chief executive expects to attract new investors, especially young people, and increase the participation of retail investors.
"The demographics of the markets are changing ... young people are early adopters of technology. They are tech savvy, always online and are on their mobile phones. This offering addresses them," said Mwangi.
The NSE is also eyeing the diaspora market as a key component to increasing market liquidity.
Kenyans living in north America and Europe provide the bulk of the roughly $50 million remittances sent home each month, often for investing in property or securities.
Kenyans living abroad previously inconvenienced by time differences will now be able to make trade orders by automatically queuing in the system until the market opens.
"The more investors you have, the more you are able to mobilise domestic borrowing for investments, raise the level of savings, market capitalisation and turnover," said Mwangi.
The system is also expected to make it easier to attract companies thinking of listing on the NSE.
"To list new companies you have to show them you have a liquid market and investing in technology helps you demonstrate that," said Mwangi.
About 95 percent of market players have enrolled to use the new broker system once it goes live, for a one-time fee of 2 million shillings ($24,680) and monthly service charges estimated at 136,000 shillings. ($1=81.05 Kenyan shillings) (Editing by David Clarke, Greg Mahlich)