The Central Bank of Kenya (CBK) has moved to ease market uncertainty by clarifying that its planned retail bond system will be integrated into the existing Dhow Central Depository System (Dhow CDS), rather than creating a new, parallel infrastructure.
The clarification, made by CBK Governor Kamau Thugge, addressed fears that the bank might procure a standalone platform that could potentially fragment Kenya’s Ksh. 2 trillion bond market.
Governor Thugge stated that the CBK would not acquire a new, separate platform. Instead, the retail system will run on the current Dhow CDS platform already in use by institutional investors. This move is designed to ensure retail participation is aligned with the existing infrastructure for government securities.
The announcement comes weeks after the CBK invited bids for a comprehensive retail bond system covering both primary and secondary transactions. The tender had fueled speculation that the bank might bypass the Nairobi Securities Exchange (NSE), which recently hit a record high with annual bond turnover surpassing Ksh. 2 trillion for the first time.
The primary goal of the retail system is to enhance financial inclusion by enabling everyday investors to buy smaller units of bonds electronically. By plugging into the Dhow CDS, the retail system will mirror the successful structure already in place for institutional trades.
The interoperability of the platform is expected to simplify access and record keeping for retail investors. Crucially, the CBK’s decision also preserves the NSE’s role as the country’s designated secondary bond market.
Market participants had previously expressed concerns that a new CBK-run platform could duplicate or undermine the NSE’s trading infrastructure.