Kenya: Central bank to settle cash payments for equities and shares

Jan 20, 2015

The Kenyan bourse is shifting cash settlements to the central bank.

In Kenya, cash transaction settlements of bonds and shares traded on the capital market will now be done through the central bank's payment system.
The objective is to reduce risks and shorten transaction times, the market regulator said.

"This moves Kenya a step closer to attaining the status of a Regional and International Financial Centre as envisaged," Paul Muthaura, the acting CEO of regulator Capital Markets Authority (CMA), told Reuters.

Before the shift, cash settlement for securities was done by four commercial banks appointed by the market's Central Depository and Settlement Corporation (CDSC).

The CDSC, the CMA and the Central Bank of Kenya have now partnered in a new cash settlement model for equities and corporate bonds. The Real Time Gross Settlement System will now replace the previous system.

"The settlement of equities and corporate bonds at CBK is part of the Bank's legal mandate in formulating and implementing policies that best promote the establishment, regulation and supervision of efficient, effective payment, clearing and settlement systems," said Central Bank governor Njuguna Ndung'u, quoted by the Star.ADNFCR-2976-ID-801770925-ADNFCR