Business Type: A central securities depository (CSD) is an entity that holds securities in electronic form, facilitates the transfer of ownership, and provides clearing and settlement services for securities transactions. It is established under the Central Depositories Act, 2013.
Licensing Requirements: The applicant must be a company incorporated under the Companies Act with the objective of operating as a central depository. The application must be accompanied by CDS Rules made in a manner prescribed by the Authority, prescribed fees, and any other requirements as may be prescribed by the Authority.
Government Fees: Application fees are determined based on the scope of operations, typically ranging from KES 250,000 to KES 500,000. Annual renewal fees are approximately KES 200,000 to KES 300,000.
Timeline: The approval process typically takes 90 to 120 days due to the complex infrastructure and regulatory requirements involved in operating a central depository.
Limitations: The CSD must maintain adequate systems for safe custody of securities, ensure proper reconciliation and settlement processes, implement robust cybersecurity measures, comply with international standards for depositories, and maintain operational resilience and business continuity plans.
Penalties: Non-compliance may result in suspension of operations, license revocation, financial penalties, and criminal prosecution for gross negligence or fraud affecting market participants.
Enforcement: The CMA conducts regular system audits, monitors settlement efficiency, reviews cybersecurity measures, and ensures compliance with international depository standards.