Nigeria needs to continuously deepen the development of domestic custodial services industry as part of the efforts to enhance national capital formation and development of the domestic capital market.
Participants at an investor services forum organised by Stanbic IBTC Nominees Limited, a subsidiary of Stanbic IBTC Bank Plc, in Lagos agreed that stakeholders across private and public sectors must work together to unlock new market opportunities and enhance participation of local and foreign investors in Nigerian custodial services industry.
A custodial service refers to when a corporate entity or individual, known as custodian, holds a property or asset on behalf of a client. Specifically, a custodian is a financial institution that holds clients’ securities for safekeeping in order to minimize the risk of theft or loss. Securities such as share certificates, bonds, stocks and treasury bills are some of the assets a custodian holds for clients. Custody services are available to a wide portfolio of clients, including unit trust schemes, pension funds, corporate clients, high networth individuals, financial institutions, foreign, local and individual investors, insurance funds, fund managers, brokers, and dealers.
At the forum, which had the theme “Future of Custody in Nigeria – Meeting Global Standards,” participants discussed many emerging issues in the industry including global technological changes and the future of custody. In attendance at the event, which also featured a panel discussion, were local investors, fund managers, asset managers, pension fund managers, insurance companies, capital market players, regulators, policymakers, bankers and other stakeholders from the private and public sectors.
Chief Executive Officer, Stanbic IBTC Nominees Limited, Mr. Akeem Oyewale, said the inevitability of change in life and business makes it imperative to keep track of developments in the market as new insights provide that vaunted springboard to opportunities that maximise business and investment success.
“In the area of business we operate, change is a constant thing and as such it is critical to intimate our clients on what is changing in our market and in the industry. Changes can be regulatory, industry or competition driven, or it could be set off by enhanced risk awareness, as well as environmental and technological changes,” Oyewale said.
According to him, technological changes, for instance, have engendered big data analytics, which avail real-time information as well as generate actionable insights that help managers enhance business performance, increase efficiency and lower structural costs and risks.
He also noted that blockchain technology, as disruptive as it may seem, offers numerous benefits such as proficient systems and processes leading to cost efficiencies and value-added solutions.
He added that new opportunities for growth, triggered by a variety of factors, are consistently emerging in the wealth creation and management space and tapping into such opportunities requires having the right information that aids successful planning and implementation.
“This realisation underlines Stanbic IBTC’s determination to arm its clients with requisite information and tools to stay ahead of the curve. Custodianship is a pivotal component in the capital market value chain,” Oyewale said.
He pointed out that the level of awareness on how to harness the benefits of custodianship is still low in Nigeria and all hands should be on deck to bring everyone on board for mutual benefit.
He noted that advances in technology have enabled custodians to expand product solutions well beyond their traditional roles of settlement and safekeeping to reporting on and monitoring fund investment portfolios, which is consistent with increasing demands on corporate governance, as well as the increased accountability expected of fund managers and trustees.
Acting Director General of the Securities and Exchange Commission (SEC), who was represented by the Director, Lagos Zonal Office, Mr. Stephen Falomo, commended Stanbic IBTC for organizing the event, which is vital for individual investment success and sustainable economic growth.
According to him, there is need to ensure that information on custodial services, as a significant component in capital market development and growth of the Nigerian economy, continues to be disseminated, thus making sure that participants in the capital market are positioned to benefit from this development.
He noted that organisations involved in providing custodial services understand that the growth of the business depends on their capacity to attract investment, deploy effective technology and competently process large transactions, while effective policies and procedures as well as a strong regulatory environment are essential in the custody business of today.
Stanbic IBTC pioneered custodianship in Nigeria with its establishment in 1994. The bank has a Custodial license as well as a Securities Lending Agent license from the SEC. Stanbic IBTC Nominees Limited was in 2009 appointed by CBN to act as custodian in money market and fixed income securities for the Nigerian market.