The Nairobi Securities Exchange (NSE) has launched a new system for trading corporate bonds and Government of Kenya Treasury Bonds.
The new system will allow on-line trading of debt securities and is integrated with the settlement system at the Central Bank of Kenya.
In a statement, NSE said the system will achieve a true Delivery versus Payment (DVP) and hence mitigating investors’ risk. It will also create efficiency, scalability and flexibility and can support trading in bonds that have been issued in foreign currencies.
Other features of the new system that present enormous opportunities in the bonds market include; the ability to support market making, a two way quote trading model, ability to integrate with regulators’ surveillance systems and ability to report transactions that are concluded over the counter for purposes of settlement.
In enhancing the bond trading system, the Exchange acknowledged the vital role that a vibrant secondary market for bonds continues to play in raising long term capital for the National Government and corporate entities. The County Governments can will also be able to use the same system to raise capital through issuing and listing County Bonds.
In making the announcement, the NSE Chief Executive Peter Mwangi, said it was a significant step towards the Exchange’s goal of ensuring that the secondary market becomes more transparent and the price discovery mechanism is beyond reproach.
Mr. Mwangi said the multi-currency trading functionality of the new system means that foreign denominated bonds can now be listed and traded on the NSE.
“With this development, we look forward to the listing of the Government of Kenya Sovereign Bond at the Exchange,” he said.
The system is supplied by Securities Trading and Technology Pty (STT) a South African financial software development company. The STT bond system is currently in use by the Johannesburg Stock Exchange (JSE) which has the most liquid bond market in Africa.