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The Central Depository & Settlement Corporation Ltd.

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  1. The Central Depository & Settlement Corporation Ltd. ROSE MAMBO Chief Executive Central Depository & Settlement Corp. Limited AMEDA CONFERENCE SUN CITY, SOUTH AFRICA 24TH OCTOBER 2008

  2. THE KENYAN CAPITAL MARKETSMARKET PARTICIPANTS • The Capital Markets Authority • The Nairobi Stock Exchange • Stock Brokerage Firms (CDA) • Private and Corporate Investors • Custodian Banks (CDA) • Issuers • Fund managers • Investment advisors • Unit Trusts • Registrars • Settlement Bank

  3. THE KENYAN CAPITAL MARKET THE CAPITAL MARKETS AUTHORITY • The market regulator • Established under the Capital Markets Act in 1991 • Makes the Capital Markets Regulations • Licenses market participants including CDSC • Approves the listing of the securities of Issuers on the Exchange • Approves the CDS Rules and Procedures • Enforces the Rules and Regulations

  4. ESTABLISHMENT OF CDSC • Central Depositories Act 2000 • Must be approved in writing by CMA • A stock exchange must be a shareholder • CDS Rules shall be approved by the regulator • License is subject to annual renewal

  5. GOVERNANCE STRUCTURE • CAPITAL • AUTHORISED AND FULLY PAID UP • 100,000,000/= (US$ 1.4M) DIVIDED INTO 1,000,000 SHARES OF 100/= EACH • ISSUED – ALL THE AUTHORISED CAPITAL • FULLY PAID UP

  6. GOVERNANCE STRUCTURE SHAREHOLDING NSE - 20% AKS NOMINEES - 18% CAPITAL MARKET CHALLENGE FUND – 50% INVESTOR COMPENSATION FUND - 7% DSE - 2.5% USE - 2.5%

  7. GOVERNANCE STRUCTURE • BOARD OF DIRECTORS • 11 DIRECTORS • ONE OF THEM TO BE CHAIRMAN • DIRECTORS APPOINTED BY MEMBERS AS FOLLOWS: • NSE -2 • THE FUND -4 • AKS - 1 • DSE - 1 • USE - 1 • PUBLIC INTEREST – 2 – NOT STOCKBROKERS • DIRECTORS REMOVED BY APPOINTING PARTY

  8. CDS CONSTITUENTS • The CDS Organization • The Capital Markets Authority • The Nairobi Stock Exchange • Stock Brokerage Firms (CDAs) • Custodian Banks (CDAs) • Retail and Institutional Investors • Issuers and Registrars • Settlement Bank

  9. APPOINTMENT OF CENTRAL DEPOSITORY AGENTS • Members of the Stock Exchange • Non-Bank subsidiary of a bank or financial institutional • Any institutional investor • Any body corporate as prescribed by CMA • Currently only stockbrokers and custodian banks are CDAs

  10. CENTRAL DEPOSITORY AGENTS • Stockbrokers are trading participant • Custodian banks are settlement participants only • Stockbrokers can allocate trades to any custodian account • Custodians have the right of negative affirmation by T+2

  11. SETTLEMENT OF TRANSACTIONS • T+4 Settlement Cycle • T+1 Board • Settlement Bank – Stanbic Bank, Kenya • All CDAs have a settlement account with the settlement Bank • Settlement takes place at 4.00 p.m. • Not Real DVP – Banks moves cash and then CDSC moves securities

  12. GUARANTEE FUND • Used to Settle Transactions When CDA fails to fund settlement account • Comprises: • A guarantee fund levy – 0.01% • Contribution of 1,500,000/= per CDA (US$ 22,000) • Amount currently in the NSE Investor Compensation Fund • penalties

  13. GUARANTEE FUND • No Settlement Caps – In the process of introducing the Caps • Trading limit will be determined based on contribution to the Guarantee Fund • Fund has been used, most notable for three stockbrokers – 2 placed under statutory management by CMA, 1 to restructure

  14. PROGRESS TO DATE • CDSC started operations on 10th November 2004 • Depository Statistics as at 30th September 2008 • Number of Accounts - 1,447,609 • Number of Shares immobilized - 16.726 bn (31%) • Value of shares in depository - 34.5% of market cap • Market capitalization = Kshs. 970,853,255,000 (US$ 1.3bn)

  15. MARKET PERFORMANCE 2008

  16. MARKET PERFROMANCE

  17. GOING FORWARD… • Regional Integration – East African Markets (Kenya, Uganda, Tanzania, Rwanda, Burundi) • Value added services • Handling of IPOs • Registrar Services • SMS Alerts • E-Statements

  18. THE END . Q&A