Money Markets
An investor monitors trading at the Nairobi Securities Exchange. PHOTO | FILE
By GEORGE NGIGI
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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