KENYA: CDSC Operational Procedures Amendments Published for Comments

The below has been amended:

REALLOCATION OF TRADES

Custodian banks may re-allocate trades that were erroneously allocated by the stockbroker. The following procedures will apply.

• The Stockbroker who effected the trade will send a written request to the affected custodians indicating the details of the trade and the affected accounts.
• The Stockbroker who effected the trade will initiate the reallocation in the CDS.
• CDA whose client the trade was initially allocated to will accept the de-allocation in the CDS.
• The CDA whose client the trade is being reallocated to will verify the details of the reallocation and, if the details are in conformity with their clients instruction, they will immediately approve the reallocation in the CDS.
• The revised Final Settlement schedule shall be made available to all the parties involved, on the same day the trade is reallocated, by 5pm.
• The trades will thereafter settle in the usual manner.

MULTIPLE SETTLEMENT BATCHES

• There shall be multiple settlement batches per day
• Trades that fail settlement due to short securities positions in the first settlement batch will be settled in the second settlement batch and the procedures below will be followed; this function stipulates the procedures to be complied with by CDAs in respect of reporting and confirming transactions to the CDSC to clear and settle such transactions through the services of CDSC.
• Each CDA shall ensure that it has sufficient securities available in the CDS accounts, to cover its settlement obligations by T+3 12.00noon
• Each CDA shall ensure that it has in the Settlement Account with its Settlement Bank, sufficient funds available to meet its settlement obligations in accordance with the Final Settlement Report before 12.30pm on T+3.
• The Settlement bank shall notify each CDA’s Settlement position to CDSC by 12.30pm on T+3.
• CDSC shall submit final settlement instructions to the settlement banks and CBK by 1.00 p.m on T+3.
• The settlement banks shall transfer funds in accordance with the settlement instructions by 1.30 p.m. on T+3.
• CBK shall transfer funds for settlement in accordance with the Settlement Instructions by 1.30 p.m on T+3.
• The CBK will confirm settlement of funds to CDSC immediately by electronic means (or any other mode as may be agreed from time to time) settlement batch shall in any case occur not later than 2.00pm on T+3.

PROCEDURES UPON DEFAULT- BUY IN

Buy-in will be effected by the Stockbroker which has defaulted under the supervision of the Securities Exchange. CDSC provides for a buy-in period of additional trading sessions apportioned as per the following procedures. Graduated penalties will also be levied as stipulated below.

• CDSC will issue the defaulting broker with the buy-in notice by 12.00 noon on T+3.
• A daily penalty of 0.14% of the value of the unallocated trade shall be levied on the stockbroker on from T+2 5pm until the buy in process is initiated.
• The CDSC will inform the Securities Exchange of the buy-in by 12:00 noon on (T+3), and will provide the Securities Exchange with the following details:
• The defaulting Stockbroker,
• The security, its price and quantity undelivered.
• The date set for buy-in.
• The buy in will be executed two business days after the notice is issued, that is, on T+6 9.00am.
• A daily penalty of 1% of the value of the unallocated trade shall be levied on the defaulting stockbroker until the buy-in process is concluded.

SUBDIVISION (SPLIT) OF SHARES

This function describes the procedures to be complied with by Issuers for subdivision of shares, whereupon the shares will be posted directly to clients Securities Account.

DE-LISTING OF IMMOBILISED SECURITIES

The Issuer will inform the Securities Exchange which will in turn inform the CDSC in writing of the proposed date of delisting. The CDSC will write to the Issuer within 7 days of the notice of delisting asking for instructions on dealing with the securities accounts.

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