T-bills trade set to rise after same day settlement introduced

Trading of Treasury bills and bonds is set to rise following launch of a system that allows investors to settle transactions on the same day.

Nairobi Securities Exchange said it will be relaying information of trades conducted every two hours to the Central Bank which is the custodian of all bonds and bills allowing them to move the securities between the involved traders during the same day.

The three (3) intervals are relayed at 11.00am, 1.00pm and market closure at 3.00pm.

“This development has enabled our market achieve a settlement cycle which ranges from T+3 to T+0. (T refers to the transaction day). T+0, commonly referred to as day trading means that an investor can purchase a Government of Kenya Treasury Bond in the morning and trade the same bond within the same trading day,” said Nairobi Securities Exchange in a statement.

Drop in interest rates is expected to ignite trading in the secondary markets as holders of high yielding securities put them on sale in effort to harvest capital gains. Bond trading has been slow in the first half of the year at Sh226 billion compared to Sh260 billion in a similar period last year.

This year alone the Government has raised Sh64.07 billion through Treasury bonds.