- A Central Depository and Settlement Corporation (CDSC) account enables Kenyans to trade stocks and government bonds electronically
- Opening a CDS account is simple and requires ID, a KRA PIN and other documents; interestingly, there are options that allow even minors to choose to participate when they are guided
- If you intend to trade in shares listed on the Nairobi Stock Exchange, you must have a CDS account
Muyela Roberto is one business journalist at TUKO.co.ke with over 9 years of digital media experience, offering deep insights into Kenyan and global economic trends.
Many people in Kenya looking for more knowledge about personal finances and investment options.
Source: Getty Images
By now, if you frequent social media, you should have come across investment and personal finance videos loaded with words like shares, Sacco dividends, interest rates, shares, bonds and bills.
Another word that has become popular is CDSC.
A Central Depository and Settlement Corporation (CDSC) account is essential for anyone who wants to invest in stocks or bonds on Nairobi Stock Exchange (NSE).
This account is operated by the Central Depository System (CDS) and facilitates electronic holding and transfer of shares, making share trading efficient and secure.
In addition to shares, a CDS account is also used for government bonds and bills, which provides opportunities for various investments in government securities.
How to open a CDS account
Opening a CDS account involves a simple step-by-step process. According to the CDSC, the first step is to select a Central Depository Agent (CDA) that is authorized to manage CDS accounts.
You can find one list of these agents on the CDSC website, and some agents even offer online account opening platforms for convenience. Some of the approved agents are ABC Capital Limited, Access Bank Kenya, Credit Bank Plc, The stock bankand KCB Bank, among others.
“To open a CDS account, you must complete a CDS-1 form and provide supporting documents,” a CDSC official shared in a recent video on X.
Required documents include a national ID or passport, passport size photos and a KRA PIN. Minors need additional documentation, such as a birth certificate, while organizations and companies must present registration documents and, in some cases, board resolutions.
Once the form is filled and the documents are ready, the form must be signed in the presence of your CDA to complete the application.
It is a mandatory requirement to open a CDS account if you intend to trade stocks or bonds on the NSE.
Bonds, bills and the CDS account
Many hear about government bonds and bills of exchange but may not fully understand them. Bonds are long-term debt instruments issued by the government to raise funds for projects, while bills are short-term instruments with maturities of up to one year.
Trading in T-bills and bonds requires a Central Securities Depository (CSD) account, which allows investors to place bids directly under Central Bank of Kenya auctions.
Bonds, especially infrastructure bonds, can offer attractive returns of up to 16% per annum, making them a popular choice for investors looking to earn passive income.
Additionally, bonds are available in two types: taxed fixed deposits, which finance public projects, and tax-free infrastructure bonds, which support infrastructure initiatives.
By opening a CDS account, investors can participate in the primary market for bonds and T-bills, or alternatively, you can broker the secondary market, although fees may apply.
Proofreading by Otukho Jackson, multimedia journalist and editor at TUKO.co.ke
Source: TUKO.co.ke
