Central Bank of Kenya to implement settlement system for bonds - CNBC Africa

Central Bank of Kenya to implement settlement system for bonds

East Africa

by Elayne Wangalwa 0

The trading of corporate bonds at the NSE will now be routed through the central bank’s RTGS system. PHOTO: postonline.co.uk

The trading of equities and corporate bonds at the NSE will now be routed through the central bank’s Real Time Gross Settlement system under the Kenya Electronic Payment and Settlement System (KEPSS).

The move by the bank, which is in line with international standards, has positioned Kenya as a regional investment destination and is seen as a ‘major milestone in the history of capital markets’.

“The launch of this key initiative comes at a time when the prestigious Fortune magazine has named Kenya among the seven countries around the globe recommended as the most attractive investment destinations, due to political stability and sound macroeconomic management,” said Paul Muthaura, acting chief executive of Kenya’s Capital Markets Authority (CMA).

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“Having been singled out on the continent, we should expect a significant increase in portfolio inflows in the short to medium term.  In this regard, clearing and settlement efficiency and integrity will take on increasing importance, reinforcing that this initiative has come at a most opportune time.”

The launch of the single clearance window for equities and corporate bonds will also enable traders to settle payments promptly and to receive frequent audit trails of their investments.

In addition, the robust settlement model will further boost foreign and domestic investor confidence in the Kenyan market and promote greater liquidity in the Nairobi bourse.

(READ MORE: Nairobi bourse debuts at 88% high)

“I would urge the National Treasury to continue spearheading the consolidation of the two domestic Central Securities Depositories as we position ourselves towards integrating the capital markets infrastructure within the EAC,” Muthaura said.

According to Rose Mambo, Central Depository & Settlement Corporation (CDSC) chief executive, the number of successful transactions through the system is testament to its security, and will allow smooth settlements and transactions in the wider East African region.

“I am happy to note that CDSC will be joining this settlement community to enable cross border payment and transfer of value within the region in an easier, safer and more efficient way.”

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