Kenya’s Central Depository and Settlement Corporation (www.cdsckenya.com) continues to expand outside the borders of Kenya, buoyed from its 2008 triumph with the region’s biggest initial public offer, Safaricom. Recently, Business Daily newspaper (www.businessdailyafrica.com) reported that CDSC has submitted a bid to offer consultancy services for setting up an electronic share depository for the Zimbabwe stock market.
According to the report, the CDSC issued a statement on 21 September, that it had submitted a proposal to the Zimbabwe Securities and Exchange Commission “to provide advisory services” in the intended implementation of an electronic share registry similar to the one introduced in Kenya in 2004.
The statement read: “Such services have been previously provided by CDSC to the Uganda Securities Exchange, and discussions are ongoing for the provision of similar services to the capital market in Rwanda.” CDSC also recently won the tender to provide registrar services for the BRALIRWA Initial Public Offering (IPO) in what will be the first local listing and share offer for Rwanda’s over-the-counter securities market.
CDSC is privately owned by the Capital Markets Challenge Fund (50%), Nairobi Stock Exchange (20%), AKS Nominees (18%), Capital Markets Compensation Fund (7%), Uganda Securities Exchange and the Dar-es-Salaam Stock Exchange (2.5% each).
Chief executive officer Rose Mambo denied recent reports which said the CDSC was experiencing financial difficulties. She said it: “..made a profit in 2009 and maintained a strong financial position… 2008 was a good year boosted by high turnover as a result of the Safaricom IPO, so the reports of a slump are inaccurate.”.
CDSC receives a 0.06% commission on all trading done at the Nairobi Stock Exchange, where market turnover was KSh97.52 billion ($1.2 billion) in 2008 against trades of KSh88.17 billion in 2007, boosted mainly by the Safaricom IPO which pumped Sh50 billion worth of shares in to the market and attracted 750,000 individual applicants. Its revenues (turnover) declined after foreign investors reduce their trading at the NSE in the storm of the global economic crisis.
Ms Mambo was reported as saying CDSC’s income from trade commissions in 2009 was KSh38.1 million (US$473,535), a drop from the 2008 turnover of Sh63.6 million. The regional push is meant to increase its sources of revenues after a 2-year slow-down at the NSE reduced earnings from trading commissions, which is the core revenue source for the company.
The newspaper says the NSE had 1.4 million accounts in the Central Depository System (CDS). In addition, the CDSC also acts as a clearing house for market transactions. The system introduced 6 years ago made it possible to transfer and register securities in electronic format without the necessity of physical certificates. This had an immediate impact of increasing number of shares traded at the bourse from 380 million in 2003 to about 5.8 billion in 2008, according to CDSC data. The company also aims to cut operational costs by substituting paper-based statements for text and e-mail statements.
According to the report, Rwanda also has six more listings in the pipeline.