Securities trading - Kenya
Reference
Key market-tradable securities
Denomination Currency | Maturity Profile | Interest Rate | Interest payment frequency | Place of Settlement | Form |
Treasury Bills | |||||
KES | 91,182,364 -day | Not applicable (at discount to face value) | At maturity | DhowCSD | Registered, dematerialised |
Infrastructure Bonds a | |||||
KES | Varies | Fixed | Semi-annually | DhowCSD | Registered, dematerialised |
Government Bonds | |||||
KES | Between 2 – 30 years | Fixed | Semi-annually | DhowCSD | Registered, dematerialised |
a. Infrastructure Bonds are used to fund specified infrastructure projects which are tax exempt for withholding tax purposes.
Trading Venues
Nairobi Securities Exchange (NSE)
The Kenyan securities market is regulated by the Capital Markets Authority (CMA), which supervises the Nairobi Securities Exchange (NSE) and the Central Depository and Settlement Corporation (CDSC). The primary trading venue is the NSE, which facilitates both on-screen and Over-the-Counter (OTC) trading of fixed-income securities.
OTC transactions are settled at the Central Bank of Kenya for government securities.
Brokerage firms are connected to the Nairobi Securities Exchange’s platform which enables brokers to enter and amend sell and buy orders and obtain online market information and news.
Investors submit their orders via their respective brokers in the market.
For a list of trading participants at the NSE please visit the following link: https://www.nse.co.ke/list-of-trading-participants/
Secondary Market
Secondary market trades involving Government securities in Kenya are traded on the Nairobi Securities Exchange on the Automated Trading and Reporting System (ATRS), which is the electronic system for on-screen trading and reporting of transactions.
The NSE is approved to operate a hybrid fixed income market encompassing both on-exchange and off-exchange, including government bonds.
- Government Bonds traded on the secondary market via the NSE using ATRS and OTC
- Treasury Bills: traded OTC settled on T+0.
Trading hours
Trading for listed fixed income securities on the NSE is conducted continuously from 9:00 a.m. to 3:00 p.m. EAT.
On-Screen trading: trades are entered into the ATRS, matching is conducted automatically.
Over-the-Counter (OTC) trading: counterparties can negotiate fixed income securities outside the ATRS. All trades concluded OTC must be reported to the Central Trade Repository within 30 minutes of the transaction.
Government securities shall not be traded within the last 3 working days prior to principal redemption.
Settlement Cycle
T+3 Settlement: all trades on fixed income securities issued by the Government require to be settled on a T+3 basis.
However, counterparties can agree on a settlement cycle of T+0, T+1, T+2 or T+3.
Settlement Model
On-exchange trades for government bonds are settled on a Gross-Gross basis, following BIS Model 1whereas OTC trades for Treasury Bills are settled via Delivery vs. Payment (DVP) model.
Portfolio Transfers (FOP) with no change of beneficial ownership requires the approval from the CMA, the estimated turnaround time is about three weeks. During the portfolio transfer process, FOP trading is restricted.
