91% opted to have bond certificates immobilized in CDS accounts, according to the africancapitalmarketsnews.com. The ATS links to the central depositories of the Central Bank of Kenya (CBK) and the Central Depository and Settlement Corporation (CDSC). It offers T+3 settlement (payment and transfer of ownership on the third day after trading), compared to T+7 on the manual market, and a much better flow of information.

Some market players told the local press on Monday that there had been problems with trading, but the NSE said that the system was functioning well and the only difficulties had been with some pricing by the sponsoring broker Standard Investment Bank, and some clarification on schedule dates falling on a Saturday, according to local press reports.

NSE Chief Executive Officer Peter Mwangi was reported as saying: “From this day forward, all immobilized listed bonds, such as the KenGen bond will trade in an end-to-end automated capital acquisition platform, right from the placement of orders, to matching and finally settlement. This is basically what has been implemented.”

More capital

NSE First Vice Chairman Lutaf Kassam said: “Automation is the key that will unlock the much needed capital required to stimulate this economy. Automation is really about ensuring easy flow of information so as to allow market players, investors and potential issuers to make informed decisions.” He thanked investors for their support in choosing to have their bonds traded electronically.

The KenGen bond is currently the only corporate bond that has been immobilized and listed on the ATS. The next step could be to trade treasury certificates (which make up 92% of the KSh385 bln - $5.2 billion - market) and Government bonds, which are on the CBK central depository and so already linked to the ATS. Other corporate bonds can join but those already in issue and traded on the manual market would have to ask their bondholders to immobilize their certificates through an immobilization timetable approved by the Capital Markets Authority and CDSC.

The ATS is expected to offer more liquidity and attract more retail investors. It offers real-time data streaming from the transactions and more information on bond market mechanics. It guarantees T + 3 settlement for corporate bonds and T + 0 for government bonds and this will help liquidity.