Do you have a CDS account? As I have mentioned before, when investing through the NSE, bonds, or shares, you will need a CDS (Central Depository System) account.
A CDS account acts like a bank account but for investing in the financial markets. It holds your bonds and shares and allows you to manage the transfer processes when you sell any of these assets. It is also electronic, meaning you can easily access it online for better tracking of your investments.
You can open the CDS account as an individual, jointly, or as a company.
How to open a CDS Account in Kenya
Through the CBK
One of the best ways to open a CDS account is through the CBK (Central Bank of Kenya). Here’s how to go about it:
- Visit any of the CBK branches in Nairobi, Kisumu, Mombasa, and Eldoret and get the signature mandate card. You can also get it from any of its currency centres if they are close to you, Meru, Nyeri, and Nakuru.
- Fill in the details in block letters, and ensure they are clear and legible. The names need to be as they are on your ID card or your passport, whichever you will be using for the application. Also, do not disfigure or fold the card.
- Attach a coloured passport size photo, a recent one, and a copy of your ID or passport. These need to be certified by your bank, a commercial bank in Kenya.
- Your banker must also verify your signature and certify the filled signature mandate card by having it signed by 2 of its authorised signatories in the provided spaces and appending the bank’s stamp.
- Drop the documents at the branch or the cash collection centre.
Through a CDA
CDAs or Central Depository Agents are third-party agents authorised by the CDSC (Central Depository & Settlement Corporation) to open CDS accounts for investors. It could be a custodian bank, an investment bank, or a stockbroker.
If your banker has an investment unit, you can probably use them to open a CDS account. However, ensure the agent you use is registered with the CMA and licensed by the CBK. Here’s a list of current authorised CDAs
The agent will guide you on how to go about the process. You will still need copies of your ID or passport and coloured passport size photos.
Learn about How to Invest in Kenya Government Securities
Living in the Diaspora?
Are you a Kenyan living in the diaspora, and you want to start investing back home? The application process for the CDS is not overwhelming for you, either.
- Get the signature mandate card from the CBK website.
- Fill in all required details.
- Attach a recent coloured passport size photo and a copy of your ID or your passport
- Your banker, who must be a local commercial bank in Kenya, needs to verify the details you provide plus the specimen of your signature and certify all documents.
- Send the scanned copies of the documents via email to firstname.lastname@example.org and mail the hard copies through the post office to:
Financial Markets Department
P.O. Box 60000- 00200
It takes about 7 working days for the CDS account to be opened. You will receive a notification with your CDS account number through your email, so ensure you capture the correct one on the signature mandate form. It will be followed by a formal notification letter.
Why Invest in Kenyan Securities?
Investing is one of the core features of financial planning. It enables you to save money in the present while growing it for your future. With shares, you get to earn money through the company’s dividends or the stock’s appreciation, where you can sell your shares at a profit.
Did you know you can also use your shares as collateral for a loan? If you have a significant number of shares and do not wish to use other assets like land as collateral, you can always use the shares as security when borrowing from your banker. You and your lender just need to sign the Pledge Form, deliver it to your CDA, and the CDSC will mark your shares as pledged. Once you have fully repaid the loan, your lender will fill the required form to withdraw the pledge.
See, it is pretty easy to open a CDS account and start your investment journey. Visit a CBK branch or currency centre of a CDA and start the process today. And, if you are living abroad, visit the CBK website, download the form, fill, send the documents via email and post office.