Nairobi — Kenya has launched the first ever automated bond trading market in East and Central Africa.

The Nairobi Stock Exchange (NSE) last week witnessed what will turn a new leaf in bond trading with the debut Kengen automated trading on the national bourse.

According to the NSE Chief Executive Officer, Mr. Peter Mwangi, all immobilized listed bonds, such as the KenGen bond will trade in an end to end automated capital acquisition platform, right from the placement of orders, to matching and finally settlement.

The Automated Trading System (ATS) of the NSE has been linked to the Central Depositories of the Central Bank of Kenya (CBK) and the Central Depository and Settlement Corporation (CDSC).

Analysts predicted that the bond market automation was what was required to re-ignite the Kenyan capital markets long battered by bad economic times and an on-off bearish streak.

The first vice chairman of the Mr. Lutaf Kassam who was also at the listing ceremony noted that automation of the bond market and its resultant benefit was not solely a capital markets issue.

"At its core, automation is the key that will unlock the much needed capital required to stimulate this economy. Automation is really about ensuring easy flow of information so as to allow market players, investors and potential issuers to make informed decisions," Kassam said.

"The ability to effectively capture and distribute this data is best done through an exchange platform, which ensures the objectivity of the data relayed."

The KenGen bond is currently the only corporate bond that has been immobilized, thus it trades through the ATS. This basically means that because KenGen gave its bondholders the option of having share certificates or CDS accounts, the bondholders are at liberty to utilize either the manual trading system or the automated system. Other corporate bonds, which were issued during the manual trading environment, are also able to utilize the automated platform.

"Corporate bond issuers will require to first request their bondholders to immobilise their bond certificates through an approved immobilization timetable done in conjunction with the CDSC," clarified Mwangi.

The automated environment will greatly facilitate an informed retail investor base according the financial market analysts. The availability of real time data streaming from the transactions will open up the bond market mechanics to them, and demystify this area.

Further, the ability to guarantee a settlement time of T + 3 for corporate bonds and T + 0 for government bonds will go a long way in facilitating liquidity in the market.

"It is for us an indication of the faith that bond investors have in our trading platform system. Market confidence is really about the relationship between robust systems, an informed investor base and the ability of a market to deliver a reliable, efficient and objective price discovery mechanism. In the end, market confidence is best served through an automated environment," said Mwangi.

The stock markets CEO however noted that progress in the capital markets was crucial owing to the dynamic nature of this particular field.

"Caution must be tempered with practicability so as not to stifle improvements in the market. Our ships must be prepared and ready to ride the rising tide of opportunity and change," he urged the attending market participants. The first day of trade of the ATS system for bonds ran without a hitch. Though there was a minor clarification on the pricing schedule which the sponsoring stock broker quickly and timely clarified, the interest in the KenGen Public Infrastructure Bond (PIB) was tangible.