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NSE unveils Sh250 million plan to enhance electronic trading system

BUSINESS
By By James Anyanzwa | April 11th 2014

By James Anyanzwa

Nairobi Securities Exchange (NSE) is set to upgrade its automated trading system (ATS) as part of efforts to improve efficiency and transparency in stock and bond trading.

 The enhanced electronic trading platform is also expected to improve liquidity in the market and guarantee faster settlement in the trading of bonds and shares.

 The project whose cost is estimated at Sh250 million will also include procurement of new electronic trading system to accommodate new products such as the Real Estate Investment Trusts (REITs) and futures and derivatives instruments.

 Chief Executive Peter Mwangi said the upgrade would begin this year. He said the investment would enable the exchange to better serve the changing market and support the introduction of new products. “We are doing an upgrade across the board for all products, both existing and new. The project will start this year and we expect some systems to be completed this year and others by next year,” Mwangi told The Standard yesterday. The NSE was automated in 2006 in a move that ensured that buy and sell orders are matched automatically and are executed on a first come first served basis.

 The ATS is linked to the brokers’ back office (BBO) system, Central Bank’s system for treasury bonds trading and the Central Depository System (CDS) that stores all shares in electronic accounts.

  Automated bond trading started in November 2009 with the Sh15 billion Kenya Electricity Generating Company (KenGen) bond issue, which was oversubscribed by over 60 per cent, prompting the power producer to take up an additional Sh10 billion through a green-shoe option in the underwriting agreement.

 The Fixed Income Securities Market Segment has been a reliable platform for the Government to raise funds through Treasury Bills, Treasury Bonds and Infrastructure Bonds.

Over the past seven years, the Government has raised Sh995 billion through the issuance of Treasury Bonds listed at the NSE.

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