Capital Markets

System upgrade delays start of same-day shares trading

An investor at the NSE. Trading is currently settled in a minimum of three days. FILE PHOTO | NMG
An investor at the NSE. Trading is currently settled in a minimum of three days. FILE PHOTO | NMG 

Stock investors will wait longer to enjoy same-day trading of shares after Kenya’s clearing house said it was yet to complete a platform upgrade to facilitate faster settlement.

Intraday trading at the Nairobi Securities Exchange (NSE) was due to begin this month, but has now been postponed to August due to delays in installing a new $120,000 (Sh12 million) depository software system.

Central Depository and Settlement Corporation (CDSC) chief executive Rose Mambo said the launch of day-trading was tied to the new platform.

“Same-day trade was tied to the new system. We have now set a go-live date of August,” Ms Mambo told the Business Daily.

“There are certain things we had to adjust and the scope was widened a bit. We had to adjust the date,” she said.

Currently, trading of shares at the NSE is settled in a minimum of three days.

South African tech firm Perago is now racing to complete setting up the new depository software ahead of the launch date.

The platform will be linked to the Nairobi bourse and the Central Bank of Kenya, which processes real-time payments for CDSC.

Ms Mambo said the depository and settlement firm is banking on the new app to handle other new products such as securities lending and borrowing and support the commodities and futures market.

Depressed bourse

Experts reckon that same-day trading and settlement would deepen liquidity at the depressed bourse.

“It will provide an opportunity for taking short-term positions in the market as opposed to currently where investors have to wait for at least three days to complete a transaction,” said Maurice Oduor, investment manager at Cytonn.

All investors trading shares and corporate bonds at the Nairobi bourse are required to open accounts at the settlement agency.

There were 1.61 million investor accounts as at December 2016, according to data from CDSC.

The clearing house for stocks currently handles up to 15,000 to 30,000 transactions daily.

Treasury bills are handled by the CBK and those wishing to buy government securities must open CDS accounts at the banking sector regulator.

Set up in March 1999, CDSC is 50 per cent owned by Capital Markets Challenge Fund Ltd — a consortium of nine firms including banks and insurance companies.