Traders at the Nairobi Securities Exchange will now be able to settle bond trades in a single day. The new development has come after NSE upgraded its trading system to allow immediate upload of executed trades.
Previously, it took up to three days to finalise such transactions. The new system will enable Central Bank to settle bond transactions the same day they are made by investors.
NSE adopted the new system to improve efficiency in trading government bonds. With the new system, fixed income traders will be able to make several bond transactions in one trading session, popularly known as ‘day-trading’. The move is expected to improve liquidity in the secondary market for bonds and attract more investors in the bond markets.
In 2018, the bond market recorded a turnover of KSh557.72 billion equivalent to 27.95 per cent increase from KSh435.89 billion worth of bonds traded in 2017. Most of the participants in the bond market were foreign investors.
The upgraded system will begin to operate on 1 March 2019.