Borrowing, lending of shares now goes live at Nairobi bourse
This follows approval by the Capital Markets Authority (CMA) of a securities lending and borrowing (SLB) solution developed by the Central Depository and Settlement Corporation (CDSC) to go live.
“The approval granted to CDSC after successful testing in the Regulatory Sandbox marks a critical milestone towards the realization of sound market infrastructure,” said CMA Chief Executive Wyckliffe Shamiah.
In a typical transaction, a borrower provides collateral and an initial margin upfront in exchange for shares that they can trade on the bourse and return to the owner after the lapse of the period agreed.
CDSC Chief Executive Nkoregamba Mwebesa said the platform will boost market liquidity and give investors the opportunity to make returns during both bull and bear market conditions.
“We expect that as SLB transactions grow, we shall be able to release significant volumes of valuable shares that currently lie idle in CDS accounts for trading,” he said. NSE Chief Executive Geoffrey Odundo said the SLB is geared towards improving liquidity in the market.