By James Anyanzwa
The implementation of the much-awaited broker back office (BBO) system has failed to kick in as scheduled.
The delay was occasioned by the discovery that the software had not been well adjusted to cope with the local operations of the Nairobi Stock Exchange (NSE).
Industry sources told The Standard that the system malfunction was detected during a gap analysis exercise.
"The system was supposed to have gone live by now but it is not. There are a number of issues that have not yet been fulfilled. Our gap analysis revealed that systems for particular transactions were missing," said source.
The BBO, which seeks to curb malpractices in the trading of shares, was initially planned to be operational by end of last month (March).
"The system had not been customised enough to take over our operations here seamlessly. There are various changes that they have to do in order for the system to cope with our operations here," said source.
The software was acquired from India’s Chella Software Private Ltd last year. The NSE and experts from the supplier have been conducting training for stockbrokerage personnel firms and investment banks to teach them how to operate the system. The exercise involved training on financial, accountancy and management matters.
Training ongoing
"The training has been going on and most of it has been done," said our source.
NSE chief executive officer Mr Peter Mwangi could not be reached for comment.
Chella Software is a leading vendor for large financial services firms dealing with securities broking, investment management, market risk management and treasury operations. BBO is expected to provide end-to-end automated solutions directly to individual brokerage firms, with seamless integration to electronic trading, central depository, and the national clearing and payment systems.
The BBO system is also expected to support trading of equity and debt instruments with full Internet trading capability, centralised control, and in-built risk management mechanisms across the entire trading process.
The Sh75 million software is to be implemented in two forms depending with the choice of each market intermediary. Members of the stock exchange will be allosed to choose between a centralised system controlled by the NSE, and an in-built system independent of the bourse.
Preferred systems
Stockbrokers and investment banks have since signed contracts with NSE on the preferred systems. A majority of the players have opted for a centralised system with a view of cutting down on operational costs.
The BBO system will be integrated in the management and accounting information systems of the brokerage firms. While the system is designed to help brokers manage their new businesses requirements, it is also intended to expose all transactions carried out by market intermediaries and help rein in rogue brokers.
