Central Bank yesterday ushered Kenya’s financial markets into a new era after it unveiled a Central Securities Depository (CSD) that will transform the country’s financial markets by enhancing operational efficiency and expanding digital access.

The new DhowCSD will provide easier ways to access registry, custodial, and settlement services for both primary and secondary market operations, with the goal of deepening the market for broader financial inclusion and improved monetary policy operations.

By deepening the market and improving its transparency, new developments could help lower the cost of borrowing for the Treasury by tapping a wider pool of funds.

The truth is that the government securities market is dominated by banks and pension funds, which collectively hold a huge chunk of the Sh4.76 trillion in the government’s domestic debt partly due to a complicated process of opening trading accounts at the CBK.

Since its launch on July 31, the facility has attracted more than 7,000 new accounts, which is a significant increase compared to the previous total of 44,000 accounts, signalling the increasing appetite for investment through the platform.

The name “Dhow” signifies CSD’s role in facilitating the trading of government securities locally and internationally, and draws inspiration from the traditional wooden boats that facilitated trade along the coasts of East Africa, Eastern Arabia, and South Asia.

Indeed, the platform aims to not only democratise bond trading but also allow retail investors both within the country and abroad, easier access and attractive returns through their mobile phones.  This development will go a long way to open up a sector that was previously dominated by sophisticated and deep-pocketed investors.

Since the product was open for use, retail investors, including Saccos, companies, self-help groups, institutions and individuals, have significantly increased their holdings of government debt, making them the fastest-growing category of bond investors.

By deepening the market and improving transparency, the platform aims to lower the government’s cost of borrowing and tap into a wider pool of funds.