Kenya has bought its own stock trading system to handle more investment products and reduce the payment period for its stock investors from three days to one.
The EastAfrican has learnt that Kenya's new settlement system, acquired from South Africa will be in use from the third quarter of the year.
"This is a master plan that is being implemented by the Central Depository Corporation and the Nairobi Securities Exchange. Already, there is a committee within the CDSC working on this new system," a source told The EastAfrican.
The "day trading" system will enable stockholders to get their money the same day after selling shares on the Nairobi Securities Exchange (NSE). Buyers too will get their stock the same day.
The new system is expected to spur activity on the exchange, which has more than 60 listed firms, and boost the country's efforts in upgrading the position of its capital markets to "emerging market" from "frontier market" status.
Kenya is eyeing this reclassification, which is usually done by Morgan Stanley Capital International (MSCI), to attract more foreign capital.
"We need more trading activities on our market and we believe this is a right step towards that direction," the source added.
Testing of the new system will be between April and July.
The NSE is also enhancing its system to be compatible with the new settlement system procured by CDSC.
"We are in the process of upgrading our equities trading platform to enhance our availability, support the growth of new products and strengthen our surveillance capacity. We undertake to deliver innovation to our stakeholders and provide a robust infrastructure for trading of securities," said Geoffrey Odundo, NSE chief executive.
CDSC chief executive Rose Mambo and head of information and communication technology James Gikonyo did not respond to our questions on the new technology by the time of going to the press.
Kenya withdrew from the regional capital markets infrastructure project, allowing other member countries to proceed and link their stock markets.
The joint regional project, which is funded by the World Bank is expected to connect the trading platforms of the NSE, Uganda Securities Exchange (USE), Dar es Salaam Securities Exchange (DSE) and Rwanda Stock Exchange (RSE) so that they operate as a single market in real time.
The project, however, has failed to take off due to the incompatibility of the software provided by the Pakistan-based Infotech Private Ltd and the stock settlement systems of the participating EAC member states -- Uganda, Tanzania and Rwanda.
Kenya has the biggest capital market in the region with 63 listed companies. Tanzania has 28 listed firms with six cross-listed from Kenya.
Uganda has 16 listed firms of which eight are domestic and eight are cross-listed from Kenya while Rwanda has eight listed firms with four being cross-listed from Kenya.
Kenya's CDSC was set up in November 2004 to establish and operate a system for handling deliveries and settlement of securities in the country's capital market.
Among its key objectives include lowering transaction and operational costs of stock trading through increased efficiency, to attract more investors.
It also enhanced the trading, delivery, registration and settlement of securities in the market.
In July 2011 the CDSC reduced the settlement cycle for equities and bonds to three days after the transaction from four days after the transaction with a view of improving liquidity in the market.