CSD vs CDS: Two Accounts You Need to Invest in Shares and Bonds

As Kenyans seek to diversify their investments, bonds and shares are some of the common options people consider to make wealth.

However, one notable question Kenyans ask is what they need to get started in their investment. In this article, we detail the Central Depository System (CDS) account, which is needed for stock investors, and the Central Securities Depository (CSD), which is needed for bond investments.

The names may sound almost identical, but these two accounts serve very different purposes. 

Read more: How to Start Investing in the Kenyan Stock Market: A Beginner’s Guide

What is a CDS Account?

A CDS account, short for Central Depository System account, is the account you need if you want to buy or sell shares listed on the Nairobi Securities Exchange (NSE). This includes popular stocks such as Safaricom, Equity Bank, KCB, EABL, and many others.

The CDS account is managed by the Central Depository and Settlement Corporation (CDSC). This institution acts as the official custodian of all NSE-listed shares, holding them electronically on behalf of investors.

Before the digital system was introduced, investors received physical share certificates. Today, your ownership is recorded electronically, making trading faster and more secure.

To open a CDS account, you must go through a licensed stockbroker or investment bank, also known as a Central Depository Agent (CDA). Once your account is active, any shares you buy are credited to your CDS account, and when you sell, they are debited from the same account.

The key takeaway here is simple: a CDS account is mandatory if you want to invest in company shares at the NSE. It is also the account through which you receive dividends and participate in bonus share issues or rights issues.

Read more: How Much You Would Spend Buying Just 1 Share From Every Company on the NSE

What Is a CSD Account?

A CSD account, on the other hand, stands for a Central Securities Depository account. This is the account you need if you want to invest in government securities, specifically Treasury Bills and Treasury Bonds, including special issues such as infrastructure bonds.

The CSD system is managed by the Central Bank of Kenya (CBK). When you lend money to the government by buying a bond or Treasury Bill, your investment is recorded in this CBK-run system.

Unlike a CDS account, which must be opened through a broker, a CSD account can be opened directly by an individual investor. 

Today, the CBK allows Kenyans to open CSD accounts online through the DhowCSD platform, or manually by submitting physical forms to the Central Bank.

Once your CSD account is active, any Treasury Bills or bonds you buy are credited there, and interest payments—commonly known as coupons—are paid directly into your linked bank account.

The key takeaway is that CSD accounts are exclusively for government securities, not shares.

Read more: 3 Reasons CBK Can Block You From Investing in T-Bills & Government Bonds

Why You Actually Need Both Accounts

A CDS account opens the door to equity investments, where returns come from dividends and capital gains. This is ideal if you are comfortable with market fluctuations and are investing with a long-term growth mindset.

A CSD account, on the other hand, provides access to fixed-income investments backed by the government. These are generally more predictable and can offer tax advantages, especially on infrastructure bonds, where interest income is often tax-free.

Read more: Can Bonds Pay Your Rent? How Much Investment You Need to Earn Between Ksh15K & Ksh30K Per Month

Wrapping Up

Understanding the difference between a CDS account and a CSD account may seem basic, but it is one of the most important foundational lessons in investing in Kenya.

If your goal is long-term financial growth, stable passive income, and better control over your money, these two accounts are essential tools.