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What do I need to know about the CDS ?

was commissioned as ready for use on 10th November 2004. The commissioning meant that investors who hold or intend to hold shares listed on the Nairobi Stock Exchange (NSE) can now open electronic shares accounts through their stockbrokers or their custodian banks, and will henceforth trade through those accounts rather than in paper certificate form, as was previously the norm. The implementation of the Central Depository System is a truly national project and the benefits accruing from its success will be beneficial to all Kenyan investors. It will radically change how business is done at the stock exchange and it is therefore critical that the public understands its operations. We would thus like to take this opportunity to address the key issues regarding the CDS operations and processes as well as respond to the concerns that investors and potential investors may have regarding trading in a paperless environment.

WHAT IS THE CDS?

CDS stands for the Central Depository System. This is a computer system that facilitates holding of securities in electronic accounts and facilitate faster and easier processing of transactions for NSE securities (shares and bonds) 

HOW DO I OPEN A CDS ACCOUNT?

By completing and signing a securities account opening/maintenance form with your Central Depository Agent (CDA), providing two recent passport size photographs and a photocopy of your national identity card.

WHO IS A CDA?

A CDA is a central depository agent, either a stockbroker or a custodian bank, who has been authorized by CDSC to open accounts in CDS on behalf of investors. This is a list of authorized CDA’s at the moment;

 NAME  LOCATION  TELEPHONE  STATUS
 Francis Drummond & Co. Ltd.  Hughes Building, 2nd Fl.  318690  
 Dyer & Investment Bank Ltd.  Loita House, 10th Fl  227803  
 Francis Thuo & Partners Ltd.   International House, 13th Fl.  226531  Suspended
 Nyagah Stockbrokers Ltd  Nation Centre, 12th Fl    Suspended
 Kestrel Capital (EA) Ltd  Hughes Building, 7th Fl  251758  
 Ngenye Kariuki & Co. Ltd  Travel (UTC) House, 5th Fl  224333  
 Suntra Investment Bank Ltd  Nation Centre, 10th Fl  223330  
 Reliable Securities Ltd  Standard Building, 3rd Fl  241350  
 CFC Financial Services Ltd  Corner House, Ground Fl  221452  
 Discount Securities Ltd  International House, 3rd Fl  219552  Suspended
 African Alliance Kenya Ltd  Kenya Re Towers, 4th Fl  2735013  
 Ashbhu Securities Ltd  Finance House, 13th Fl  210178  
 Crossfield Securities Ltd  IPS Building, 5th Fl  246036  
 Apex Africa Investment Bank Ltd  Rehani House, 4th Fl  242170  
 Faida Securities Ltd  Windsor House, 1st Fl  243811  
 Solid Investment Securities Ltd  Contrust House, 6th Fl  244272  
 Standard Investment Bank Ltd  Hazina Towers, 17th Fl  220225  
 Stanbic Bank Ltd  Stanbic Bank Building  342711  
 Kenya Commercial Bank  Kencom House  248912  
 Barclays Bank of Kenya Ltd  Barclays Plaza  241270  
 NIC Bank Ltd  NIC Bank House,Upper Hill  2719199  

WHAT DO I NEED TO OPEN A SECURITIES ACCOUNT?

You need two recently taken passport size photographs, original National ID or passport, in the case of a company you need the original certificate of incorporation, and if you are an organization registered in any other way you need the certificate of registration. You need to sign the form before your CDA. 

WHAT DO I GET WHEN I OPEN AN ACCOUNT?

You will obtain from your CDA a CDS account number together with a duplicate copy of the account opening form for your records. Please keep your CDS account number confidential. 

WHAT DO I DEPOSIT IN A CDS ACCOUNT?

Shares. From time to time CDSC and NSE will notify the public through the press of shares which have been chosen for depositing in CDS accounts. Sometime this year, the CDS will be open for depositing of bonds. 

MUST I OPEN A CDS ACCOUNT?

Yes, if you intend to trade in shares, which have been selected for depositing. 

CAN I USE A DIFFERENT BROKER FROM THE ONE I HAVE BEEN USING?

Yes, you can use as many brokers as you want. You will need to open a CDS account with each broker you wish to use.

HOW CAN I MOVE FROM ONE BROKER TO ANOTHER?

By completing and signing the Securities Transfer Form, supplied to you by your broker. The form must be signed also by your current CDA and your new CDA. If your deposit your shares through a custodian bank, you can use any broker without need to transfer the shares.

WILL IT COST ME MORE TO USE CDS?

No. There is absolutely no increase in cost for the CDS accountholder.

WHAT IF THE COMPUTER AT CDSC HAD A PROBLEM?

CDSC has offsite back up facilities and contingency measures to ensure data will not be lost, and to ensure business continuity.

WHAT IS THE PROCESS OF DEPOSITING SECURITIES?

  • Visit a CDA with the certificates you want to immobilize.
  • Be sure you have already opened an account or are ready to do so.
  • You will be issued with and assisted to complete a Security Deposit Form.
  • Sign your form with the signature used when buying the shares.
  • Return the form to the CDA together with the certificates you have included on the form to be deposited.
  • You will be given a duplicate copy of the completed and signed form, after the CDA has countersigned as evidence of your deposit.
  • The CDA will forward the form and the certificate to CDSC
  • CDSC will forward the certificates and forms to the company’s shares registrar for verification.
  • When the registrar confirms the certificates as genuine, the shares will be deposited in your account.
  • Once the shares are in your account you can trade in them.

WHAT DO I GET TO PROVE I HAVE DEPOSITED SECURITIES?

  • You get the duplicate copy of the deposit formy
  • You get a monthly statement if you have a deposit or a trade that month.
  • You get a quarterly statement if you have not had a trade for three months.
  • The statements are issued directly to your address as indicated on account opening the form.

WHAT ARE THE BENEFITS OF CDS?

CDS assures you of faster safer and easier trading in your securities.You do not have to wait for the issue of certificates before you can trade again as your shares are credited to your account 5 days after the date of trade.

DO I LOSE MY DIVIDENDS AND BONUSES?

No, you will still get your entitlements without any change.

HOW LONG DOES IT TAKE TO COMPLETE A TRADE IN CDS?

5 days, from beginning to end.

WHO REGULATES CDSC?

The Capital Markets Authority

HOW SAFE IS CDS?

CDSC has taken measures to ensure the security of your shares. The company has back up facilities and procedures that would ensure business continuity in the event of anything happening either to the computer system or its usual premises. CDSC has taken precautions to ensure its system is not interfered with. CDSC has employed staff of high integrity and keep very high levels of confidentiality. Where appropriate and available the company has taken insurance.

WHERE CAN I ASK QUESTIONS ABOUT CDSC AND CDS?

Please feel free to contact/visit the Central depository and settlement corporation (CDSC) on 10th Floor, Nation Centre, Kimathi Street.

Telephone No. 253077/8/

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