How to Trade in Treasury Bills and Bonds via CBK's DhowCSD: A Comprehensive Guide
Learn everything you need to know about trading Treasury bills and bonds through CBK's secure and efficient DhowCSD portal.
Treasury bills and bonds have long been popular investment options in Kenya, offering a safe and predictable source of income. The Central Bank of Kenya (CBK) has made investing in these government securities even more straightforward by introducing the DhowCSD platform. This article provides an all-inclusive guide to trading in Treasury bills and bonds via CBK's DhowCSD.
Understanding Treasury Bills and Bonds
Before delving into the DhowCSD platform, let's establish what Treasury bills and bonds are. Treasury bills are a secure, short-term investment that offers returns after a specified period. They are sold at a discount, so investors pay less than the face value but receive the total face value at maturity.
On the other hand, Treasury bonds are medium- to long-term investments that yield interest payments every six months throughout their lifespan. The interest rate determined at auction remains fixed for the entire life of the bond, making them a predictable source of income.
Both Treasury bills and bonds are considered risk-free as they are government securities. This means that investors loan money to the government, which promises to repay them at maturity.
The CBK's DhowCSD: Trading Made Easy
The CBK introduced a new platform, DhowCSD, that allows individuals to invest in Treasury Bills and Bonds via a mobile app. This portal aims to provide a simple, efficient, and secure way to invest in the Government of Kenya's securities. It has revolutionized how Kenyans trade in Treasury bills and bonds by eliminating manual payments and bids for government securities.
Setting Up Your DhowCSD Account
Getting started with DhowCSD is simple. You can visit the DhowCSD web portal or download the DhowCSD mobile app. If you're a new user, click "Create Account" to start registering. If you already have a Central Securities Depository (CSD) account, you can select "Already have a CSD account" to activate your online account.
Registration Steps
- Choose a username, enter your email address, and set a strong password.
- Accept the Terms of Service to continue.
- Start the registration process for your CSD account.
- Enter your personal information exactly as it appears on your official ID (passport/ID).
- Choose the ideal broker to make your transactions easier.
- Include your Kenya Revenue Authority (KRA) PIN certificate and any necessary tax exemption certificates, if applicable.
- Enter the verification code sent to your registered email address to confirm it.
- Complete the registration process within seven days since the system will delete incomplete profiles.
Once your account has been approved, which usually takes 1-2 days, you can begin investing.
The CBK DhowCSD app can be downloaded from either Google's Play Store or Apple's App Store, providing accessibility for all smartphone users.
For those who prefer using the browser, the DhowCSD portal can be accessed here.
Placing a Bid on DhowCSD
Placing a bid for Treasury bills or bonds on DhowCSD is simple. Click the BUY/SELL button and choose between "competitive bidding" and "non-competitive bidding." In competitive bidding, investors specify the prices or yields they desire to purchase securities. Offers will be approved based on how their price or yield exceeds the minimum acceptable price or maximum acceptable yield set by the CBK. In non-competitive bidding, you select the quantities you want to purchase, but the price or yield is determined by the highest competitive bids approved during the auction.
READ ALSO: DhowCSD Portal: How to Register, Download the App, and Invest in Treasury Bonds in Kenya
The Impact of Treasury Bills and Bonds on the Economy
Government-issued bonds are an investment tool that allows the government to borrow from the domestic market. The CBK raises these funds on behalf of the Kenyan government, which utilizes them to finance various initiatives such as constructing roads and hospitals and providing public services.
The recent development of the CBK's DhowCSD is a testament to how the Kenyan government is leveraging technology to make it easier for individuals and corporate bodies to invest in government securities. This platform significantly reduces the time and effort required to trade in these securities and expands the opportunities for individuals to participate in the country's economic growth.
FAQs
Q1: What are Treasury bills and bonds? Treasury bills are short-term investments sold at a discount, while Treasury bonds are medium- to long-term investments that offer fixed interest payments.
Q2: What is the CBK's DhowCSD? DhowCSD is a platform introduced by the Central Bank of Kenya that allows individuals to invest in Treasury Bills and Bonds via a mobile app.
Q3: How can I register on DhowCSD? You can register by visiting the DhowCSD web portal or downloading the DhowCSD mobile app and following the registration process.
Q4: How do I place a bid on DhowCSD? You can place a bid by clicking the BUY/SELL button and choosing between "competitive bidding" and "non-competitive bidding."
Q5: Are Treasury bills and bonds safe investments? Yes, they are considered risk-free investments as they are government securities. The government promises to repay investors at maturity.
Q6: How does the government use the funds raised from Treasury bills and bonds? The funds are used to finance various government initiatives, such as constructing roads and hospitals and providing public services.
Disclaimer: This article is for informational purposes only and is not intended as investment advice. Conducting research or consulting with a financial advisor before investing is always essential.
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