CDSC turns 18 with notable achievements and sets eyes on bigger plans

By Aida Kimemia and Nkoregamba Mwebesa

We are celebrating 18 years of providing the Kenyan capital markets with efficient, reliable, and secure depository and settlement services for listed securities on the Nairobi Securities Exchange (NSE).

The Central Depository and Settlement Corporation (CDSC) operates a critical market infrastructure that guarantees transactional trust among investors on the exchange, through continuous investment in world-class human capital, technology, and processes.

For almost two decades, we have played an instrumental role in the growth of the Kenyan capital markets by dutifully executing our mandate in the post-trade arena, while also facilitating inclusion of investors into the market through simplified Depository Account (CDS Account) opening and maintenance requirements, in close collaboration with our appointed Central Depository Agents (CDAs).

We have catalysed growth in the Kenyan capital markets by being a reliable partner to different stakeholders in serving dynamic investor needs. Some of our historical milestones include: Aligning trade settlement timelines to international standards T+3; facilitating major local Initial Public Offers, including the KenGen and Safaricom IPOs; fully digitizing the Corporate Bonds and Equities market segments; acting as the placement and paying agent for the first mobile traded Government Bond – M-Akiba; and bringing to the market, new products like Mkopo Hisa, which allows investors to get loans using their shares, and Securities Lending and Borrowing (SLB) that gives them additional flexibility to earn positive returns during both bull and bear market conditions.

Today, the CDSC is responsible for the safe custody of over Ksh2.7 trillion worth of investor assets, the settlement of over Ksh150 billion worth of trades on an annual basis, and service to over 1.6 million investors, supporting them in their wealth-creation journey on the Exchange, and so much more. We have appointed 43 Central Depository Agents to offer CDS Account opening and maintenance services, and we are deploying innovative technology solutions to increase the reach and distribution of our products and services.

As we take stock of past successes, we remain focused on the future. Our commitment is to protect and grow shareholder value by focusing on the set Financial, Employee, and Customer goals. We continue to execute our strategic objectives, anchored by three main drivers: Technology, People, and Distribution. We plan to grow the customer base for our products and services, even as we continue to deliver on our mandate in the Kenyan Capital Markets.

Our focus is on investors, and we are working with our strategic partners to be more responsive to customer needs by ensuring we facilitate efficient and convenient access to the market, as well as to our products and services. By guaranteeing customer satisfaction through multiple access points and solutions that address investor pain points, we shall have higher customer retention, which will have the positive result of ensuring active participation and growth of investors accessing our market.

We are implementing our 2021-2025 strategy that has reaffirmed our vision of becoming a solution provider of choice for depository and settlement services. We are actualising this goal through continued investment in our core system – the Central Depository System (CDS) – and aligning our workforce with the required skills-set to make this possible.

This has ensured we continue to perform our core mandate while also introducing new solutions that appeal to niche customers and help the organisation to sustainably diversify its revenue streams. SLB, for instance, targets pension schemes and long-term institutional investors, who can now earn an additional return from their shares without selling them when they participate as lenders. These investors can earn through all market cycles as they will still enjoy shareholder benefits like dividends and bonus shares, and can also participate in Rights Issues.

By focusing on the customer, we are steadily increasing our client access points and distribution options through strategic partnerships with CDAs and Fintechs. Innovation and technology are also enabling the provision of CDSC services digitally through our mobile application and Chatbot.

Throughout this strategy cycle, we plan to increase these channels and access points to bring more investors into the capital markets space, while ensuring the existing customers are actively trading and participating in wealth creation opportunities.

The CDSC has demonstrated competence in its core mandate and is exploring other markets and industries that could benefit from our unique expertise.

We are very grateful to our stakeholders and customers who have continually shown confidence in us and supported us in the last 18 years. Expect more as we continue to pursue our mission of facilitating marketplaces that are secure, transparent and efficient.

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Aida Kimemia is the chairperson of the Central Depository and Settlement Corporation (CDSC) Board, and Nkoregamba Mwebesa is the Chief Executive