The Central Bank of Kenya (CBK) has rolled out a new Government Securities system that will enable investors to trade in government bonds and treasury bills through a web-based site or a mobile application.
The platform, dubbed CBK DhowCSD, will be active from Tuesday, August 1, and will be available to both Android and iPhone users. With the DhowCSD portal, investors will invest in Government securities digitally, a significant shift from the previous manual investment process.
“CSD” stands for Central Securities Depository, while “Dhow” represents a sailing vessel. All bidding, whether competitive or non-competitive, will be conducted exclusively through the platform.
“DhowCSD incorporates all the essential services required to invest in government securities such as CSD account opening and bidding for government securities in a convenient platform,” the CBK’s said in a statement.
To Invest in Treasury bills and bonds, investors will no longer be able to make manual bids and payments for the securities at the Central Bank of Kenya (CBK) once the modernized Central Securities Depository (CSD) goes live. Within the CBK DhowCSD system, you will be able to open and manage a CSD investment account at the Central Bank of Kenya.
For payment convenience and security, all transactions will be conducted via commercial banks. As a result, the Central Bank will no longer accept cash or cheque deposits for payments related to Treasury Bills or Bonds.
Once you have successfully opened your CSD account online, you will gain the ability to invest in Treasury Bonds and Bills, with access available to BOTH the primary auctions and the secondary market through the platform.
The system will also enable banks to trade with one another by exchanging collateral from their treasury holdings, thus allowing smaller banks to get favourable interbank rates.
A brochure on the new service by CBK shows that existing account holders, who have been bidding for securities manually or through the Treasury Mobile Direct service, will have their details transferred to the new CSD.
Moreover, the platform is expected to tap into Kenyans abroad. Speaking at a previous event when she was officially opening Kitisuru Amani Garden in Nairobi, PS Roseline Njogu, from the State Department for Diaspora Affairs, said the platform is almost ready and will help limit diaspora remittances frauds.
“The Government remains committed to promoting diaspora investments back home by offering attractive investment opportunities, incentives and establishing financial instruments that facilitate diaspora investments,’ Njogu said.
She gave an example of DhowCSD, a new digital platform by the Central Bank of Kenya (CBK) that will enable the diaspora community to invest in government securities.
“It provides a new and easy way to invest in government securities and will, therefore, be beneficial to the diaspora. They don’t need to come back to Kenya to make investments in the T-bills, T-bonds, among others,” she said.
The new CSD is an electronic over–the–counter trading platform that is meant to ease trading in the securities, improving liquidity and opening a more convenient avenue for Kenyans abroad to buy government debt.
She added that the platform will also help limit fraud, with the CBK report showing that diaspora investors lose a third of their cash due to misinformation, fraud, theft and corruption.
Investors will be able to access reports directly from the platform including their statement of account and portfolio statement.
The new CSD (Central Securities Depository) is expected to make trading securities easier using electronic methods. It will also help make prices fairer and more transparent during trading, which could lead to lower yields (profits or returns for investors).
Work on the platform, funded by the World Bank Group, started around September 2020 and was expected to go live in June 2022.
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