Inside Politics

Local Central Depository and Settlement Corporation accounts hit 12,400 in Q3

Thursday, November 4th, 2021 00:00 |
Capital Markets Authority (CMA). Photo/Courtesy

The number of active accounts increased to 12,400 at the Central Depository and Settlement Corporation (CDSC) signaling a surge in local shareholder participation and liquidity in the local market.

A most recent Capital Markets Soundness Report for the third quarter of 2021 says CDSC accounts that were activated every quarter grew from 6,214 in the second quarter of the year to 12,673.

“Increased active accounts portends higher retail investor participation. This was due to CDSC aggressive account reactivation campaign,” said CMA in the market report.

Day trading

The regulator noted that a recent move to allow day trading will significantly boost the CDSC accounts further in the last quarter of the year and next year.

“More activations and new accounts anticipated with introduction of day trading.

This will translate into higher product update (demand side) and market liquidity,” CMA said.

The regulator has been running campaigns especially among the youth challenging them to open accounts and invest in stocks.

CMA and Nairobi Securities Exchange (NSE) are under immense pressure to improve local investor activities, increase the number of listed companies to shore activities at the bourse.

NSE has gone through an extended difficult period as many companies have been delisted and foreigners control a whopping 70 per cent of all trading.

The number of profitable and liquidity counters has dropped sharply with investors concentrating on banks, EABL and Safaricom with very few long-term investors looking at the other counters.

This means there is too much money chasing very few opportunities hence the obsession of investors with fixed income which has predictable risk and return.

Last September CDSC announced that it had finalized integration of the CDS SWIFT messaging functionality, thus enhancing the straight through processing of financial information between the CSD and capital markets participants in Kenya.

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