NSE to automate bond trade

September 25, 2009
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, NAIROBI, Kenya, Sept 25 – Trading of bonds at the Nairobi Stock Exchange (NSE) will now be done electronically beginning November.

NSE Chairman Eddy Njoroge said on Friday that the automation of the bonds segment, which is expected to enhance the trading by addressing the problems of liquidity and time flexibility, is undergoing testing.

“By the time the KenGen Bond comes into trading, we are hoping that we will have launched the Automated Trading System for the bond, which means that they can be traded just like the equities through the Wide Area Network,” Mr Njoroge, who’s also the Managing Director of KenGen said.

Currently, the trading of bonds is done manually through an open-outcry system but the automation will see them traded on an over-the-counter platform.

This development will also see brokers trade the bonds from their offices and will also allow for electronic dissemination of information about the market which will also spur trading activity.

“Ideally, on paper it stands at T+6 but owing to the efficiencies brought about by the paperwork involved, this process takes longer. Automation would result in a transaction period of T+3 bringing us closer to global standards,” he explained.

This is further expected to enhance the secondary market which has been hailed as an excellent and cheap avenue to raise medium and long term funds to finance development projects.

Statistics from the NSE shows that turnover volumes for the Fixed Income Securities Market segment increased by over 127 percent to Sh65 billion for the first six months of this year.

Mr Njoroge spoke during the listing ceremony of a Sh1 billion bond by Shelter Afrique which is the third issue by the housing finance institution in the last nine years.

Shelter Afrique Managing Director Alassane Ba said the money from the issue will be used to fund housing projects for middle income households in the country.
“Projects to benefit from the issue have already been identified, appraised and approved by the Board of Directors,” said the MD.

The institution has financed over 80 projects in different parts of the country with a total loan value of Sh6 billion.

Shelter Afrique’s issues have been successful and the company has lauded the Capital Markets Authority for enabling them to raise funds for their projects.

The firm revealed that it was in the process of finalising another issue of $13 million in West Africa Economic and Monetary Union all of which would go a long way in strengthening their balance sheet and improving the quality of loans to their borrowers.

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