COLLECTION DEVELOPMENT CAT
RALPH MAONI BSCIS/2022/58640
DUNCAN MULU BSCIS/2022/51396
DANIEL MANDU BSCIS/2022/71768
1. Identify and name information center of your choice found in any part of your
country, types of clearing houses in Kenya.
I.
Payment clearing houses
These are institutions that facilitate clearing and settlement of payment between banks
and other financial institutions. They include Nairobi security exchange, PESALINK and
Kenya Bankers Associations.
II.
Cargo clearing house
Clearing and settlement of securities transaction between investors and brokers. They
ensure that securities are transferred from sellers and buyers in a timely and securely
manner. They include central depository and settlement cooperation.
III.
Energy cleaning house
Facilitate trading of energy products such as electricity and oil. Examples include
Kenya pipeline and lighting company.
IV.
Agricultural clearing house
Are institution that facilitate agricultural activities they include East Africa Tea Trade
Association.
2. Describe the history and background of clearing houses.
According to Williams in 1999, the ideas leading to automated clearing house, arose in
the late 1960s one early predecessor was a us federal initiative used to help the united
states air force to get their pay checks on time. The success of this initiative led to an
expansion to other employees and the government adopted it as a major payroll standard.
Separately 1968, a group of check clearing house association set up the special committee
on paperless entries to build an automated payment system after concerns for the number
of checks being clear for payrolls.
These led to the first automated clearing house association formed in California in 1972,
other regional ACH associations followed. The difficulty in compliance between
different organizations led them to join to form national automated clearing house
association in 1974.
National automated clearing house association added and consolidated new rules which
led to automated clearing house. As computer and telecommunication advance over the
next few years the system continued to develop.
From the late 1980s through to 2000s the system continued to develop with a number of
enhancement, which led to financial institutions being ensured by the federal deposit
insurance cooperation becoming direct members making it much easier for the ACH
network to be used by banks.
3. Explain the functional role of the information center
The automated clearing house is primary system that agencies use for electronic fund
transfer. With, automated clearing house funds are electronically deposited in financial
institutions and payments are made online.
Faster processing
Automated clearing house processing runs almost instantly usually giving you access to
funds from transactions within 24 hours.
Automatic payment setup
Automated clearing house transactions make it easier for your customers to set up
automation processing for recurring purchase.
Better security
Automated clearing house transaction immediately encrypt information as it sent.
4. Describe information resources collected by clearing house
Securities information, clearing houses maintain various information about securities
Trade data, clearing house collects data from market participants and stoke brokers.
Cash settlement, clearing house process cash settlement for security traders.
5. Explain the ways in which the clearing house has contributed to development in
Kenya
Facilating capital formation
It provides a platform for companies to raise capital through the issuance of equities and
bonds.
Enhancing liquidity and efficiency
It operates the clearing settlement system for transaction conducted on clearing houses
Encouraging domestic saving and investment
It provides individuals with an avenue to invest in listed companies, bonds and other
financial instruments
Promoting cooperate governance and transparency
Enforces various roles and regulations for listed companies ensuring high standards of
cooperate governance and transparency.
6. Illustrate the challenges facing clearing house and possible mitigating solutions
Settlement risk; arises when one party fails to fulfill its obligation in securities transaction
leading to financial loses and system risks. Its solution Is to implement robust
management system including real time monitoring.
Cyber security threats; with increasing reliance on technology cyber security threats
poster a significant risks to the NSE. Its mitigating solution is to employ advanced cyber
security measures including firewalls and deletion system
0petrational efficiency; ensuring small and efficient clearing is crucial for maintaining
investor confidence. Its mitigating solution is to invest in robust clearing system
including automated processes straight through processing
According to Nairobi securities exchange limited