Kenya Same-Day Stock Settlement by September Seen Boosting Trade

Kenya’s stock market is moving toward same-day settlement on equities, allowing East Africa’s largest bourse to trade derivatives.

The Central Depository & Settlements Corp. is upgrading its system so it can handle securities lending and borrowing, derivatives and depository receipts, Chief Executive Officer Rose Mambo said by phone Thursday. The new system is expected be in place by the end of the third quarter, she said.

“When it is implemented everyone from investors, the securities exchange and to Kenya Revenue Authority stand to benefit because it means there will be more transactions,” Faith Atiti, a research analyst at Nairobi-based CBA Capital Ltd. said by phone.

Kenya’s stock market is seeking to attract investors and boost trading volumes which slowed 6 percent in the second half of 2014 from the first six months, according to data compiled by Bloomberg. The FTSE NSE Kenya 25 Index rose 24 percent last year and is up 2.1 percent in 2015.

“It will create more efficiency in trading because volumes will improve,” Eric Musau, an analyst at Nairobi-based Standard Investment Bank Ltd., said by phone Jan. 19.

In February, the Nairobi Securities Exchange said it planned to start trading derivatives and real-estate investment funds to boost market capitalization.

The depository’s plans need to be approved by the bourse and the market’s regulator before they can be implemented, Mambo said. The plan for same-day settlement was first reported by Business Daily newspaper in Nairobi, which said it currently takes four working days to settle transactions.

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