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;
|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/