How and where do I begin?
First step is to choose whether to open a personal or nominee CDS account. To open a CDS account you require to fill the requisite form CDS 1 and attach the necessary documents.

What is the CDS?
This stands for Central Depository System which is managed by Central Depository and Settlement Corporation Ltd. This company was set up to get our Nairobi Stock Exchange on to world standards of electronic settlement of securities transactions. It does away with the previously tedious need for handling physical certificates and transfer forms as securities are held in virtual form with shareholders receiving statements of their holdings.

What if I still hold physical share certificates?
For any buying or selling transaction to be carried out, share certificate must be "immobilized", by way of completing CDS 2 Form. The relative shares are deposited in a shareholders CDS account. Thus the need for one to hold a CDS account first.

Can I move my account or open accounts with more than one stockbroker?
You may open a CDS account with as many stockbrokers or investment banks as you wish. The only catch is that what is then bought through one stockbroker cannot be sold through another. These must be transferred first for any transaction to occur by completing and signing CDS 4A/4B forms.

Is it possible to trade when I'm not personally present to execute orders?
This is possible so long as a client opens a nominee account with our firm. To do so it is important that the client registers with us giving us prerequisite authority to deal on their behalf.

What is the minimum number of shares one can buy?
You can buy a minimum of 100 shares.

Why should we invest in Kenya?
We believe that Africa's time has come. After centuries of unfavorable political, economic and social trends, we are of the strong opinion that a period of stability that is conducive to building and growth is upon us. We at Bid Securities Ltd wish to be part of that process and to help drive it. While others see Africa as an uninviting investment destination, we are attracted by its enormous investment opportunities.

What challenges does Africa face?
A shortage of experienced and skilled people is the biggest challenge to get economic growth moving at a faster pace. For this reason, our model has a focus on the recruitment of local talent and a commitment to training and upskilling that talent.

What is the role of the Capital Markets Authority?
The Capital Markets Authority (CMA) was set up in 1989 through an Act of Parliament Cap. 485A Laws of Kenya. The CMA, which is a body corporate with perpetual succession and a common seal, was constituted and inaugurated in 1990. The CMA is a statutory agency charged with the prime responsibility of regulating the development of orderly, fair and efficient capital markets in Kenya. It licenses and supervises market intermediaries, conducts on-site and off-site market surveillance and enforces compliance, and promotes market integrity and investor confidence.

The role of the Authority is outlined in it's principle objectives which are :

• The development of all aspects of the capital markets with particular emphasis on the removal of impediments to, and the creation of incentives for longer term investments in, productive activities;
• To facilitate the existence of a nationwide system of stock market and brokerage services so as to enable wider participation of the general public in stock market;
• To create, maintain and regulate a market in which securities can be issued and traded in an orderly, fair, and efficient manner, through the implementation of a system in which the market participants regulate themselves to the maximum practicable extent;
• To protect investor interests;
• To operate a compensation fund to protect investors from financial loss arising from the failure of a licensed broker or dealer to meet his contractual obligations; and
• To develop a framework to facilitate the use of electronic commerce for the development of capital markets in Kenya.

What is the role of capital markets in an economy?

• Provides an important alternative source of long-term finance for long-term productive investments. This helps in diffusing stresses on the banking system by matching long-term investments with long-term capital.
• Provides equity capital and infrastructure development capital that has strong socio-economic benefits - roads, water and sewer systems, housing, energy, telecommunications, public transport, etc. - ideal for financing through capital markets via long dated bonds and asset backed securities.
• Provides avenues for investment opportunities that encourage a thrift culture critical in increasing domestic savings and investment ratios that are essential for rapid industrialization. The Savings and investment ratios are too low, below 10% of GDP.
• Encourages broader ownership of productive assets by small savers to enable them benefit from Kenya 's economic growth and wealth distribution. Equitable distribution of wealth is a key indicator of poverty reduction.
• Promotes public-private sector partnerships to encourage participation of private sector in productive investments. Pursuit of economic efficiency shifting driving force of economic development from public to private sector to enhance economic productivity has become inevitable as resources continue to diminish.
• Assists the Government to close resource gap, and complement its effort in financing essential socio-economic development, through raising long-term project based capital.
• Improves the efficiency of capital allocation through competitive pricing mechanism for better utilization of scarce resources for increased economic growth.
• rovides a gateway to Kenya for global and foreign portfolio investors, which is critical in supplementing the low domestic saving ratio.

What is a share?
A share is a piece of ownership of a company or enterprise. When you buy a share, you become an investor and thereby an owner of a piece of the company's profit or losses. By buying a share, money which could have been idle or otherwise held in low interest earning savings, moves to a more productive economic activity. The profitability of investing in shares however depends on the good management of the company, avoidance of wastage and a conducive business environment.
Why do companies sell shares?

Companies sell shares to raise (borrow) money from members of the public to expand their business activities in order to make more profits. They invite members of the public to buy shares and by so doing have a say in the running of the company as lenders of money and owners.  Shareholders expect a profit as a reward from lending their money to expand the business of the company.

Who is a shareholder?
A shareholder is an investor who buys shares with an expectation of profit. Profits in shares are through dividends, gains in share prices, bonuses, rights etc.  A shareholder owns a piece of the company and its profits equal to the number of shares he/she owns.

What are the benefits of owning shares?

• A source of profits;
• A guarantor for borrowing loans from Cooperative Societies and Banks;
• A way of saving your money for the future;
• An easy and quick asset to buy and sell;
• A new business activity that is beneficial in many ways. An investor can trade in other markets trade in maize, bananas, potatoes, tomatoes, onions, mangos etc.
• Buying at low prices and selling at high prices to make a profit;
• A solution that increases financial activity and economic growth.

What are the qualities of a good share?

• Frequent and generous dividends
• The company is managed productively, transparently and is accountable to shareholders
• No wastage in the use of resources
• Respect of shareholders and their opinions
• Shares that are easy to buy and sell quickly in the market
• The company abides by the rules, regulations and laws

What is a bond?
A bond is a loan between a borrower and a lender. The borrower promises to pay the lender some interest quarterly or semi-annually at some date in the future. The borrower also promised to repay the initial money invested by the lender. The lender lends and expects to make a profit. The profit from a bond is gained in the form of an interest. At the moment some bonds in the market have an interest rate of 14%, 12%, 10%,8% depending on the type of bond it is, and when it was issued.

Who can Buy Bonds?
Any individual, Co-operative Society, Women Group, Kiama, Youth Club, Church, School, College, University, Investment Group, Insurance Company, Bank, Pension Scheme, and many other can buy bonds.

Can a Bond be sold before Maturity?
Yes. In times of need or emergencies, an investor can sell his or her bond easily and quickly in the market. The interest on a bond grows on a daily basis and so a bond has new value and price every day. An investor can therefore buy or sell a bond on any day of his or her choice. There are no penalties for selling a bond before the maturity date.

For example, an investor can buy a bond of 5 years and expect an interest of 12%. The interest is paid after every 3 or 6 months. Such an investor can sell the bond at any time of his or her choice at the current market price. The market price of a bond will depend on the number of other willing sellers and buyers in the market on that particular day. When there are many sellers in any market, prices go down and vice versa.
Who Borrows Money through Bonds?

In Kenya , it is the government and companies. In other Stock Markets, Municipal Councils, Cooperative Societies, Hospitals, Universities, Schools and other organizations can borrow money from the public through bonds. All that is required is that the organization has a good reputation and members of the public have trust in the other lending situations, a lender must trust the borrower before he or she can lend any money. The borrower must therefore be creditworthy in the eyes of the lenders or investors.

Bonds are therefore a very easy, quick and transparent way of raising money. For example, trusted and credit worthy Municipal Councils can borrow money from the public with a promise to pay a reasonable interest rate. The Council can borrow money from public with a promise to pay a reasonable interest rate. The Council can use the money to build roads, improve security, cleanliness, water supply and streetlights. A Co-operative Society can do the same and build a milk cooling and processing factory or a food processing factory. These and many more money solutions are available with the help of money managers.

What are the benefits of buying bonds?

• A bond is a very convenient asset to own;
• Accepted guarantors for may types of loans by Cooperative Societies and Banks;
• A sure source of income;
• A good money planner to meet specific needs. For example an investor can buy a bond whose interest matches payment of school fees, car or medical insurance, rent, pension allowance and much more;
• Easy and quick to sell in the market in times of need;
• A way of saving money for the future;
• Convenient and confidential;
• Easily transferable.

What is the difference between a bondholder and a shareholder?
A Bondholder

• A bondholder is only a lender to a company
• Expects a profit in form of an interest at a specific agreed date in future
• Does not vote or participate in the management of the company
• Invests to earn a reasonable return at a low risk
• A watchdog of the borrowers activities

A Shareholder

• A shareholder is a lender and an owner
• Expects a profit in form of a dividend, gain in share price, bonuses and cheaper shares (right issues)
• Attends Annual General Meetings, gives personal pinions about the company and votes thereby participating in the running of the company
• Invests expecting the highest return possible
• Accept risk as part of any business
• A watchdog of the management and company's activities
• An influencer of the company's performance

Can one be Bondholder and a Shareholder at the same time?
Yes. This gives an investor the opportunity to diversify and enjoy a balance between reasonable and very high profits.
the market.

What is a depository?
A depository is like a bank, which holds securities (like shares, bonds, Government Securities among others) for investors in electronic form. Besides holding securities, a depository also provides services related to transactions in securities.
Who are the shareholders of CDSC?

• NSE – 20%
• AKS Nominees Ltd– 18%
• Capital Markets Investor Compensation Fund – 7%
• Capital Markets Challenge Fund Ltd – 50%
• Uganda Securities Exchange Ltd – 2.5%
• Dar es Salaam Stock Exchange Ltd – 2.5%

Who regulates CDSC?

• The Capital Markets Authority (CMA)

What are the benefits of CDS?
CDS assures you of safer faster and easier trading in your securities. You do not have to wait for the issue of certificates before you can trade again as your shares are credited to your account 5 days after the date of trade.

What are the benefits of having a CDS account?

• Immediate transfer of securities
• Elimination of risks associated with physical certificates such as bad delivery, fake securities among others
• Reduction in paperwork involved in transfer of securities;
• Reduction of transaction cost
• Nomination facility
• Change in address recorded when CDA gets registered electronically with all companies in which investor holds securities eliminating the need to correspond with each of them separately
• Transmission of securities is done by CDA eliminating correspondence with companies
• Convenient method of consolidation of CDA accounts
• Holding investments in equity, debt instruments and Government securities in a single account
• Automatic credit into securities account, of shares, arising out of split or a consolidation or a merger among others.

Who are CDAs?
All Stockbrokers are CDAs. In addition, Barclays Bank, Stanbic Bank, Kenya Commercial Bank, National Bank of Kenya, Co-operative Bank and National Industrial Credit Bank (through their custodian services departments) are CDAs.

Will I have to keep any minimum balance of securities in my account with my CDA?
No. The depository has not prescribed any minimum balance. You can have zero balance in your account.

What do I get to prove I have deposited shares into my CDS a/c?

• You get the duplicate copy of the deposit form (CDS 2)
• You get a monthly statement from CDSC if you have a trade that month.
• You get a quarterly statement if you have not had a trade for three months.
• The statements are issued directly to your address as indicated on the form.

What if I had already pledged my shares to a bank/lender and left them my certificates?

• You can agree with the lender to have the shares immobilized and immediately marked as pledged in the CDS.

How does the pledge get removed from my account?
When you pay the loan, the lender completes the necessary Form (CDS6) instructing CDSC to remove the pledge.

Will I be able to change the securities offered in a pledge?
Yes. If the pledge [lender] agrees, you will be able to change the securities offered in a pledge.

Will I receive dividend on the pledged securities?
The pledgor will continue to receive dividend on the pledged securities. The pledgee will get the benefits only if the pledge is invoked and on record date the shares are in the pledgee's account.

Will it cost me more to use CDS ?
No. There is absolutely no increase in cost for the CDS accountholders

Do I lose my dividends and bonuses?
No, you will still get your entitlements without any change. Bonus shares are credited directly into your CDS account

How long does it take to complete a trade in CDS?
A maximum of 5 days. Your stockbroker can arrange for a shorter period if you want

What if I have any complaints about CDSC's services?
Please write to us at This email address is being protected from spambots. You need JavaScript enabled to view it. or visit our offices at Nation Centre 10th floor.