New Central Bank bond platform signs up additional 7,000 investors

Central Bank of Kenya (CBK) Governor Kamau Thugge.  

Photo credit: File | Nation Media Group

Over 7,000 new investors have signed up for government debt securities via the Central Bank of Kenya’s recently launched digital trading platform.

Dubbed DhowCSD, the system which went live on July 31 is an upgrade on the Central Securities Depository (CSD) infrastructure to create efficiency in investing in government securities.

The platform has, for instance, eliminated manual processes in the opening of trading accounts with the time taken to set up an account dropping from 14 days to just minutes.

The reduced turnaround time has led to the growth in the number of trading accounts in less than two months of the new platform’s rollout.

“The CBK is now opening 250 new CSD accounts daily. Before it used to open 100 accounts monthly. The strong response from Kenyans has met a robust system and the stage is set for record-breaking activity,” said President Ruto on Monday.

DhowCSD is an over-the-counter trading platform meant to ease trading in government securities. It allows Kenyans abroad to participate.

“DhowCSD is transforming Kenya’s financial markets through enhanced operational efficiency and expansion of digital access, market deepening for broader financial inclusion, and improved monetary policy operations,” stated the CBK.

Existing CSD account holders who bid for securities manually were transferred to the new CSD platform automatically.

The platform, partly funded by the World Bank, aims to lower yields on government paper by improving price efficiency and transparency.

Moreover, the platform is central to reforming the interbank money markets by restoring the functionality of the horizontal repo market.

Through the platform, banks are able to hold/hand over collateral in the form of Treasury bills and bonds from overnight lending to peers, helping improve liquidity in the banking sector.

CBK will no longer accept cash or cheque deposits as payments for government securities with all payments being made via commercial banks.

Investors are no longer capable of making manual bids at auctions with all bids being done through the DhowCSD platform.

The sale of Treasury bills and bonds through DhowCSD is set to be complemented by previous initiatives including the introduction of a new interbank interest corridor around the Central Bank Rate.

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