NAIROBI, Kenya, Mar 8 – The Nairobi Securities Exchange (NSE) has taken a step closer to becoming a paperless bourse after entering into a deal that will see all physical share certificates converted into electronic form.
This follows the appointment of Central Depository and Settlement Corporation (CDSC) as the NSE Share Registrar and Depository, which will ensure that all securities are held in electronic or ‘uncertificated’ form.
“To set the pace, all the shares allotted will be held in the depository in dematerialised form. Our decision to go ‘DEMAT” is a major step in this market,” said NSE Chief Executive Officer Peter Mwangi.
Going the ‘dematerialisation’ route which means the elimination of physical certificates as a record of security ownership is also expected to improve the efficiency of the market by tremendously reducing the transactional periods and easing the liquidity of the securities markets.
Investors, who have over the years being exposed to fraud, are also protected against vices such as destruction, loss, theft or forgery of their paper securities.
“We are confident that the CDSC will provide the best registry and depository services due to their vast experience in these two areas. The consolidation of these two services will not only aid in efficiency but also provide a safe and convenient way of holding securities,” Mwangi added.
Established in 2004, CDSC is an independent company under the Central Depositories Act, 2000 mandated with the responsibility of operating a system for handling of depository of trades in and settlement securities.
In the past, the corporation has allowed for the physical share certificates that are traded over the counter to electronically be held share balances.
With the new development, however, investors will have to demat the shares in order to trade with them in the securities exchanges.