The Central Depository and Settlement Corporation (CDSC) has received official approval from the Capital Markets Authority (CMA) to offer Securities Lending and Borrowing (SLB) in a live-market environment. The approval comes after extensive stakeholder engagement and successful tests towards guaranteeing robust operational, risk management, and technology structures to facilitate an attractive and efficient securities lending and borrowing product.

Prior to the approval, the CDSC was admitted to the CMA Regulatory Sandbox in April 2020 to test SLB in a live but controlled regulatory environment. CDSC also received a letter of no objection from the Retirements Benefits Authority (RBA) in September 2020, allowing pension and retirement benefit schemes to engage in SLB as an additional investment return avenue.

Within the Regulatory Sandbox, the financial, legal, operational, and risk management frameworks for SLB have been validated by successful transactions carried out on the Central Depository System (CDS). The CDS is the versatile underlying platform supporting SLB.

The CDSC has to date onboarded 10 SLB Agents to facilitate the rollout of SLB to investors and is in the process of onboarding all other Central Depository Agents. This is in a bid to facilitate the accessibility of the new product to investors.

Commenting n the approval, CDSC Chief Executive, Nkoregamba Mwebesa remarked, “We are quite pleased and grateful that our regulator has granted us approval to go live with SLB. This is a major milestone not only for CDSC but also for the entire market as investors have the opportunity to earn positive returns from the stock market during both bull and bear market conditions. We also expect that as SLB transactions grow.”

Also commenting on the roll out of the SLB platform, the NSE Chief Executive, Geoffrey Odundo said, “This is a significant milestone in the capital markets as Securities Lending and Borrowing is geared towards improving liquidity in the market.”