An investor monitors trading at the Nairobi Securities Exchange. PHOTO | FILE
The Central Depository and Settlement Corporation (CDSC) has delayed by six months the introduction of same-day transactions in the equities market.
The corporation attributed the step to launching the trading method — allowing conclusion of payments on the same day — to synchronising of its system with that of the Nairobi Securities Exchange (NSE). The NSE system is being upgraded.
“We realised we could not do it just by upgrading our system. We need to work with NSE and so we have a new timeline for April 2016,” said CDSC chief executive Rose Mambo.
Currently, transactions are settled in a total of four working days.
Fast conclusion of transactions will enable investors to trade on margins gained during the day, thereby improving liquidity of shares in the market. Market liquidity is a huge attraction to foreign investors who put huge emphasis on the ease of entering and exiting a counter.
The NSE executes transactions as per orders of investors while the CDSC, being the custodian of all equities, moves the securities between the participant’s accounts.
The shorter trading period will ride on settlement of transactions through Central Bank of Kenya’s Real Time Gross Settlement (RTGS) system introduced in January this year. Previously the transactions were settled in cash held by four appointed banks.
In August last year, the Central Bank introduced same-day settlements for Treasury bonds and bills.
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