Kenya: Broker Back Office System to Help Curb Fraud At NSE

Mergers, Acquisitions and Financial Results

The NSE has rolled out an automated broker back office system that will reduce risks involved in securities trading at the bourse.

It is anticipated that the BBO system will improve transparency in stock trading and curb fraudulent activities. "Transparency was an issue in the market sometime ago but stakeholders are now working together affirmatively," said CMA acting chief executive Paul Muthaura.

Clients and senior management of participating brokerages and investment banks will be able to monitor and audit activities through alerts and exception reports.Brokers' client accounts will be automatically classified as dormant depending on the level of activity, requiring additional authorisation for all transactions made on such accounts.

The BBO will enforce a strict password policy by using encrypted transmissions that will time-out inactive sessions and restrict concurrent logins. The system is connected with the trading and the clearing and payment settlement platforms, ensuring the entire process of transacting in securities will only have minimal manual intervention.

"This is a vast improvement from what we have had hitherto and will contribute to cost reduction for brokerage firms," said John Kirimi, the chairman of Kenya Association of Stockbrokers and Investment Banks (KASIB). Investors will also be able to trade through their mobile phones and eventually via internet access to the automated trading system.

"We are waiting for CMA's approval to trade over internet, and this will also help trading participants to expand their services to counties," said Bob Karina, NSE vice chairman and Faida Investment Bank managing director. Initial public offers (IPOs) and portfolio management will as well be supported the system.

It also supports complaints processing by providing insightful reports on frequency and nature of complaints, their financial impact and the time taken to resolve them. The system has been supplied by Indian technology firm Chella Software, which will also offer after-sale support such as user and investor education