The Capital Markets Authority has approved Central Depository and Settlement Corporation (CDSC) to offer securities lending and borrowing (SLB) as it exits the sandbox.
The services will be offered in a live market environment after an extensive consultation was conducted by stakeholders and tested to ensure a robust system with risk management and technology structure for efficiency reasons.
Depository company will ensure close work with stakeholders and ensure continued market growth and value delivery per the collective vision of all parties involved.
“We are quite pleased and grateful that our regulator has granted us approval to go live with SLB. It is a major milestone not only for CDSC but also for the entire market as investors have the opportunity to earn positive returns from the stock market during both bull and bear market conditions,” said Nkoregamba Mwebesa, the Chief Executive Officer of CDSC.
CDSC also received a letter of ‘No Objection’ from the Retirement Benefits Authority (RBA) in September last year allowing retirement and pension benefits to engage in SLB as an additional investment return avenue.
“The approval granted to CSDC after successful testing in the Regulatory Sandbox marks a critical milestone towards the realization of sound market infrastructure, institutions and operations as envisioned by the CMA Strategic Plan 2018-2023 and is expected to improve efficiency, liquidity and collateral management in the secondary market,” said CMA Chief Executive Officer, Wycliffe Shamiah.
The approval marks the end of an extensive stakeholder engagement and tests towards ensuring robust operational, risk management and technology structures to facilitate efficient securities lending and borrowing products.
While commenting on the roll out of the SLB, the Nairobi Security Exchange (NSE) CEO Geoffrey Odundo sad the approval was significant in the capital markets as SLB is directed towards improving liquidity in the market.
CDSC has so far onboarded 10 agents to facilitate the rollout of SLB to investors and is in the process of enrolling more Central Depository Agents to facilitate the accessibility of this new product to investors.
CDSC, the provider of clearing and settlement services in the Kenya Capital Markets, has been in the CMA regulatory sandbox since April 2020, with an aim of testing SLB in a live but controlled regulatory market.