This archive report was first published on 4 August 2020.
CDSC Launches Securities Lending and Borrowing Platform ¶
On August 4, 2020, Kenya's Central Depository and Settlement Corporation (CDSC) unveiled the pilot phase of its Securities Lending and Borrowing platform.
The platform, which is currently in its pilot phase, allows investors to lend or borrow liquid securities, specifically those under the benchmark NSE 20 Share index.
Securities lending and borrowing is a temporary transfer of securities from a lender to a borrower, with a simultaneous agreement to return the securities either on-demand or at a future date.
For institutional investors, securities lending is an ideal instrument with a low-risk profile that can generate extra income on securities that remain idle in a portfolio for an extended period.
According to the Central Bank of Kenya, banking institutions hold the highest percentage of public debt, made up of Treasury Bills and Bonds, at 54.88%.
Government bonds and equities account for the majority of the securities on loan globally, with the global revenues from SLB transactions standing at over US$5.1 Billion in 2019.
The CDSC platform has been approved by the Capital Markets Authority to facilitate Securities Lending and Borrowing using this model.
The lender will receive income from the securities they lend out, without having to liquidate their portfolio, and the lender does not have to manage the collateral since CDSC will perform this function.
