Legal and Regulatory Framework
The legal and regulatory framework of the establishment and operations of the CDSC is provided for in the Central Depositories Act 2000 (the CDS Act) .The object of the Act is to facilitate the establishment, operation and regulation of central depositories, to provide for the immobilization and eventual dematerialization of, and dealings in, securities deposited therewith in Kenya, and for connected purposes.
CDSC operates under the regulatory oversight of the CMA. Its day-to-day management is guided by the CDSC Operational Rules (contains main principles) and CDSC Operational Procedures, which outline the detailed processes and description on how the different functions are performed. The Rules and any amendment to the Rules must be approved by the Capital Markets Authority.
CDSC plays a critical role in the Capital Markets infrastructure in Kenya. Its role is one of high importance for the efficient functioning of the domestic and regional financial markets. It ensures a safe environment for all current and future investors in the capital markets.
CDSC is a licensee of CMA. It is an independent company mandated to ensure the independence of the clearing, delivery and settlement of securities and risk management.
However, to retain the necessary nexus with the stock market, the law requires that the stock exchange be a shareholder in the CDS entity. CDSC is committed to enforcing market rules strictly and to move away from the markets reputation of honouring rules in their breach.