(Bloomberg) -- The East African Bonds Exchange says secondary trading on its platform is yet to commence because of delays in integrating its system to the Central Bank of Kenya’s.
“EABX had not anticipated the present delays in the integration of its electronic trading platform to the CBK depository system,” Chief Executive Officer Terry Adembesa said in an interview. “This has hampered the implementation of our go-live plan.”
The central bank may be considering an extension of the functionality of its platform known as DhowCSD to include secondary trading capabilities, Adembesa said. “Such action creates a complication for the market and stifles market development as it raises concerns about the overlapping of the mandates of multiple regulators.”
Adembesa said EABX remains hopeful that the issues will be resolved soon to enable testing in readiness for operational launch.
The Central Bank of Kenya didn’t respond to requests for comment by email or phone calls.
EABX, a would-be competitor for the Nairobi Securities Exchange, received its operating license from the Capital Markets Authority at the beginning of this year and traces its roots to 2009 when an industry lobby, the Bond Market Association, agreed to set up a self-regulating organization for fixed income market.
The exchange would represent an opportunity to unlock money-market liquidity, Adembesa said. Bond turnover in the secondary market more than doubled year-on-year to 323.6 billion shillings ($2.51 billion) in the second quarter, according to data from the Capital Markets Authority. On a quarterly basis, that dropped 29% from the previous three months, the data showed.
“An active secondary debt market has the potential to lower the cost of domestic debt for the government as new issues are typically priced on the basis of the secondary market yield curve,” Adembesa said.
(Updates with secondary bonds trading data in last paragraph.)
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