• A Central Depository and Settlement Corporation (CDSC) account allows 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 allowing even minors to opt in as they are guided
• If you intend to trade in shares that are listed on the Nairobi Stock Exchange, then you need to have CDS account

Muyela Roberto is a business journalist at TUKO.co.ke with over 9 years of experience in the digital media, offering deep insights into Kenyan and global economic trends.

Many people in Kenya are seeking more knowledge on personal finance and investment options.

For those who have come across these campaigns, especially on social media, words like stocks, shares, bonds, and bills are common.

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Another word that has become popular id the CDSC

A Central Depository and Settlement Corporation (CDSC) account is essential for anyone looking to invest in stocks or bonds on the Nairobi Stock Exchange (NSE).

Operated by the Central Depository System (CDS), this account facilitates the electronic holding and transfer of shares, making stock trading efficient and secure.

Besides stocks, a CDS account is also used for treasury bonds and bills, providing opportunities for diverse 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 choosing a Central Depository Agent (CDA) authorized to manage CDS accounts.

You can find a 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, Equity Bank, and KCB Bank among others.

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“To open a CDS account, you will fill in a CDS-1 form and provide supporting documents,” an official from CDSC shared in a recent video on X.

Required documents include a national ID or passport, passport-sized 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 documents are ready, the form must be signed in the presence of your CDA to complete the application.

It’s a mandatory requirement to open a CDS account if you intend to trade shares or bonds on the NSE.

Bonds, bills, and the CDS Account

Many people hear about treasury bonds and bills but may not fully understand them. Bonds are long-term debt instruments issued by the government to raise funds for projects, whereas bills are short-term instruments with tenors of up to one year.

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To trade in treasury bills and bonds, a CSD (Central Securities Depository) account is required, which allows investors to bid directly during Central Bank of Kenya auctions.

Bonds, particularly infrastructure bonds, can provide 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 fund general government projects, and tax-free infrastructure bonds, supporting infrastructure initiatives.

Opening a CDS account allows investors to participate in the primary market for bonds and treasury bills, or alternatively, you can brokers for the secondary market, though fees may apply.

Source: TUKO.co.ke