Relationship Between Forex Trading Platform, Ownership Concentration and Securities Market Performance in Kenya

Abstract

The Nairobi Securities Exchange (NSE) has implemented various financial trading platforms with the aim of enhancing securities market performance by increasing efficiency, transparency, and investor participation. Despite these initiatives, market performance remains low, with key indicators such as market capitalization, trading volumes, and liquidity showing declining trends. Empirical literature presents mixed results regarding the influence of these platforms on market outcomes, particularly in emerging markets like Kenya. This study therefore investigated the relationship between forex trading platforms and market performance, as well as the moderating effect of ownership concentration on the relationship between independent and dependent variable. The study was anchored on Market Efficiency Theory and adopted a positivist research philosophy with a quantitative research design. The target population comprised 86 investment firms at the NSE, including investment banks, fund managers, investment advisors, insurance firms, REITs, and trustee managers. A census approach was used, with purposive sampling to select respondents. Primary data were collected using structured questionnaires, with validity ensured through expert review. Data was analyzed using descriptive and inferential statistics, including correlation and regression analysis via SPSS version 26, and presented using tables. The findings indicated that forex trading significantly and positively influenced securities market performance (β = 0.882, P < 0.05), suggesting that increased forex trading activity enhances securities market performance. However, ownership concentration, while significant as an independent predictor, showed a positive but statistically insignificant moderating effect (β = 0.743, p = 0.091>0.05), indicating that it does not significantly alter the relationship between forex trading platform and market performance. The study concludes that the platforms is critical drivers of securities market performance in Kenya, enhancing efficiency, liquidity, participation, and investor confidence, while ownership concentration plays a limited moderating role. The study recommends strengthening digital trading infrastructure, improving system reliability and execution efficiency, enhancing real-time information systems, promoting investor education, and expanding participation across all market segments. It further recommends strengthening corporate governance frameworks, enhancing transparency, and protecting minority shareholders to ensure that ownership concentration supports rather than constrains market efficiency.