Bond market slowed by new trading system

A new trading system effected by Central Bank has slowed down activities in the bond market, with last week’s trading declining by almost half.

Turnover in trading at the Nairobi Securities Exchange recorded a 41.7 per cent decline last week to Sh5.1 billion this week, up from Sh8.8 billion recorded previously.

Continued decline

Analysts have attributed the continued decline in bonds turnover to the market’s move to adjust to the T24 Core banking system that was effected on April 2 by CBK.

Change in the system is expected to help in centralising operations, cost cutting through staff rationalisation and supporting new technological products such as internet and mobile banking. It also supports a larger number of users at any given time.

However, analysts have indicated that the system has presented delays in delivery and settlement of bond transactions. They also point out to its incompatibility to the NSE and the CBK trading systems. 

“This market has been declining all week… as it tries to adjust to the new T24 banking system at the Central Bank,” analysts at Sterling Capital said in their daily report.

CBK has, however, refuted the claims saying the issue is not with the T24 system but bond traders who were not familiar with the system when it was introduced.

“When we started to implement this process, traders were not familiar with the system, but many of them have now familiarised themselves.

However, they should raise the issue with us if it is client or transaction specific,” CBK spokesperson Samson Burgei told the Nation on phone.

He added that the bank has been in touch with stakeholders in the market and complaints are now very minimal.

Complaints

“On the day it was launched there were about 15 complaints, but three days later, we only had three.

“We have also been in touch with the CMA, the NSE and other stakeholders in the bond market and they have indicated that the system is now working very well,” Mr Burgei further said.