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CDSC Depository Report Updated and Risk Assessment Change

We are pleased to inform all stakeholders that the annual review of the report for the Central Depository and Settlement Corporation (CDSC) has been completed. The report has been updated with the cooperation of our support banks in Kenya and was reviewed by CDSC.

Over the past year, there have been significant changes in the Kenyan capital market affecting the depository and these changes have been reflected in the report over the course of the year. As a result of additional information being obtained in relation to all risk categories, the following changes to the risk assessments have been assigned:

•Asset Commitment Risk:Upgrade from BBB to A
•Financial Risk: Upgrade from A- to A
•Operational Risk: Upgrade from BBB to A+
•Governance and Transparency Risk: Upgrade from BBB to A-

As a result of these changes, the overall risk assessment has moved from A- to A.

Some of the major developments which have contributed to the upgrade are as follows:
•Implementation of the new CSD System;
•Removal of securities pre-validation on TD;
•Addition of a second daily settlement batch;
•Addition of new penalties in relation to failures as a result of the removal of pre-validation;
•Introduction of a Buy-in board;
•Introduction of Securities Lending and Borrowing;
•Enhanced Controls through Maker-Checker approvals.

We would like to note the main events as announced in our newsflashes in the last year:
•    CMA Approve Amendments to the CDSC Rules and Procedures – 16 October 2019
•    New CDSC System Goes Live – 14 October 2019
•    CDSC to Launch New System – Update – 2 October 2019, 17 September 2019
•    CDSC Account Dormancy Rules – Update – 13 February 2019

CSD Risk Impact

CDSC (Kenya)

CSD Risk Assessment: A
CSD Flash Impact: Stable

This newsflash is for information purposes only.