7,000 More Investors Join the New Central Bank Bond Platform

Through the recently opened digital trading platform of the Central Bank of Kenya, over 7,000 new investors have registered for government debt instruments.

The Central Securities Depository (CSD) infrastructure was upgraded with the DhowCSD system, which went operational on July 31, to improve the efficiency of investing in government securities.

The platform has, for instance, eliminated manual processes in the opening of trading accounts with the time taken to set up an account dropping from 14 days to just minutes.

The reduced turnaround time has led to the growth in the number of trading accounts in less than two months of the new platform’s rollout.

“The CBK is now opening 250 new CSD accounts daily. Before it used to open 100 accounts monthly. The strong response from Kenyans has met a robust system and the stage is set for record-breaking activity,” said President Ruto on Monday.

An over-the-counter trading platform called DhowCSD was created to make it easier to trade government assets. Kenyans living overseas are able to take part.

“DhowCSD is transforming Kenya’s financial markets through enhanced operational efficiency and expansion of digital access, market deepening for broader financial inclusion, and improved monetary policy operations,” stated the CBK.

Existing CSD account holders who manually bid on securities were automatically migrated to the new CSD platform.

By increasing price efficiency and transparency, the platform, which is partially supported by the World Bank, seeks to cut yields on government paper.

Furthermore, by making the horizontal repo market operational again, the platform is crucial to overhauling the interbank money markets.

Through the platform, banks can hold/hand over Treasury bills and bonds as collateral for overnight lending to peers, increasing the sector’s liquidity.

In order to purchase government assets, CBK will no longer accept cash or checks; instead, all payments must now be made through commercial banks.

Investors can no longer place manual bids at auctions because all bids must now be placed via the DhowCSD platform.