The Nation Newspaper

Tag: CSCS

  • ‘Only 30% of investors’ information in CSCS database’

    The Managing Director,  Central Securities Clearing System (CSCS), Mr Kyari Bukar, has urged investors to ensure that they complete all the necessary information in fulfilling the Know your Customer (KYC) requirements for the e-dividend registration.

    Speaking yesterday at the Town Hall Meeting on e-Dividend organised by the Securities and Exchange Commission (SEC) in Abuja, he said as at the last quarter of last year,  CSCS data of all investor showed that less than 30 per cent of Nigerians had complete KYC. He said when investors comply with the directive, it would ensure smooth operations in the market and ease stress encountered by investors.

    He said:  “Seven out of every 10 people in Nigeria have not yet completed the information that is necessary for us to say yes this account belongs to this person.

    “Once you fill this information right, what you will get is ease of life because you will get alert when necessary.’’

    He commended SEC’s efforts in developing initiatives that would ensure increased investor confidence in the capital market stressing that “there is no better way for an investor to have confidence in the market than the two initiative of e-divided and the direct cash settlement by the SEC.”

  • NASD, CSCS agree on NSE-OTC migration process

    NASD, CSCS agree on NSE-OTC migration process

    The Central Securities and Clearing System (CSCS) Plc, the custodian and depository for shares in the Nigerian stock market, and the NASD Plc have developed a mutually agreeable migration process for movement of delisted of shares from the Nigerian Stock Exchange (NSE) to the NASD.

    CSCS is a subsidiary of the NSE and it is the sole depository for all shares being traded at the stock market. The NASD is an over-the-counter (OTC) platform that trades on unlisted securities. It is licensed by Securities and Exchange Commission (SEC). The NASD OTC was formally launched on July 1 and opened for trading on July 2, 2013.

    Under the migration process, migration of delisted stocks on the NSE to the NASD will be automatic and seamless. Participating institutions of NASD only need to write CSCS to move their clients holding from NSE to NASD and copy the registrar of the delisted security. Once that is done, trading can continue on the OTC market.

    Managing director, NASD Plc, Mr. Bola Ajomale, who confirmed this agreement, said shareholders in companies that were recently delisted from the NSE need not be concerned about how to trade their shareholdings.

    According to him, the main aim of the NASD OTC is to create an orderly, transparent and liquid environment for investors in all unlisted securities and it is expected that the migration approach will ease trading and liquidity for investors.

    He noted that the migration from the NSE to NASD will ensure that the securities can always be traded on a SEC-regulated market irrespective of their listing status adding that this will provide greater protection for investors.

    The agreement came as six additional participating institutions joined the NASD OTC market last week, bringing the total number of registered members to 92. The six firms included Associated Asset Managers Limited, Elixir Securities Limited, Imperial Asset Managers Limited, Santrust Securities Limited, Skyview Capital Limited, and Smadac Securities Limited.

    With the new additions, investors are provided with a larger number of firms who can trade on the OTC market.

    Major companies on the NASD included Dufil Prima Foods Plc, the manufacturer of Indomie Noodles; Friesland Campina Wamco Nigeria Plc, manufacturer of Peak Milk brand; Industrial & General Insurance Plc, Central Securities Clearing System Plc, the clearing and depository arm of the Nigerian Stock Exchange and Jaiz Bank Plc, the Islamic bank.

    Other stocks included Acorn Petroleum Plc, Arm Life Plc, Afriland Properties Plc, BGL Plc, Consolidated Breweries Plc, Food Concepts Plc, Geo-Fluids Plc, Golden Capital Plc, Niger Delta Exploration & Production Plc, Partnership Investment Company Plc, Resourcery Plc, Riggs Ventures West Africa Plc, Swap Technologies & Telecomms Plc and Trustbond Mortgage Bank Plc.

    The NASD is however providing trading platform for delisted stocks and other unlisted stocks.

    It should be recalled that SEC had last year initiated rules that proscribe underhand trading in the shares of unlisted public limited liability companies (Plcs).

    According to the new rules, anyone or institution that henceforth facilitates or engages in underhand trading on securities of unlisted public limited liability company shall be liable to monetary fine and sanction by SEC.

    The rules stated that all securities of public unlisted companies shall be bought, sold or transferred only by means of a system approved by SEC and under such terms and conditions as the Commission may prescribe from time to time.

    The new rule prohibits anyone from buying, selling or engaging in transfer of securities of a public unlisted company except through the platform of a registered a securities exchange established for the purpose of facilitating over-the-counter (OTC) trading of securities.

    “Any public unlisted company, director, company secretary, registrar, broker, dealer or such other persons who facilitate the buying, selling or transfers of the securities of a public unlisted company otherwise than through the platform of a duly registered securities exchange, shall be liable to a penalty of not less than N100, 000 in the first instance and not more than N5, 000 for every day of default,” the rule stated.

    The rule effectively concentrates trading on the shares and other securities of unlisted Plcs unto the only registered OTC platform, the NASD Plc.

  • NASD, CSCS create alternative dematerialisation system

    The NASD Plc and Central Securities Clearing System (CSCS) Plc have devised an alternative dematerialisation system that allows investors to deposit their physical share certificates with the CSCS in exchange for a tradable digital account.

    Dematerialisation is the process of converting a physical certificate into a digital account balance at the CSCS, much like the conversion of a physical cash note to a bank account balance. The NASD- the over-the-counter (OTC) trading platform for unquoted securities only trade on fully-dematerialised and freely transferable securities that must have been registered by the Securities and Exchange Commission (SEC).

    The NASD OTC was formally launched on July 1 and opened for trading on July 2. Formerly known as the National Association of Securities Dealers, NASD OTC is registered with Securities and Exchange Commission (SEC) as an over-the-counter (OTC) trading platform for unquoted securities; including equities and bonds.

    Managing director, NASD Plc, Bola Ajomale, said the alternative dematerialisation was meant to solve the difficulty in the share certificate conversion.

    According to him, since the launch of the over-the-trade (OTC) market, it has been noted that some registrars had difficulty in completing the conversion from physical to digital balances.

    “To solve this difficulty, NASD and CSCS have agreed on a procedure to allow shareholders transfer their physical certificates to CSCS as their custodian.  CSCS will hold custody of the physical certificates, but will also create a digital account for the shareholder. ’This ensures that the shareholder is relieved of the risk of holding a physical certificate and the company secretary does not bear responsibility for digital trading,” Ajomale said.

    He urged stockbrokers to advise their selling clients to transfer their holdings in such securities to CSCS by filling a form that makes CSCS the transferee or custodian.

    He noted that the alternative is a major step towards creating more transparency and liquidity on the OTC market and a win-win by NASD measures.

    Reviewing the performance of the NASD since inception, Ajomale said the OTC platform has made some significant inroads into creating a transparent and liquid over the counter market.

    According to him, in line with their objectives, more public companies are registering with the SEC, thus providing greater regulatory protection to shareholders.

    “Reference prices have been created for 80 per cent of the securities traded on the market, making price discovery easier for investors and operators. ’Dematerialisation of unlisted securities has started; a critical step in creating a safer market for investors, while trade volumes and investment flows are being reported, providing important planning information to portfolio managers. Of course, there are many more targets and milestones to meet and NASD shall keep market watchers informed every step of the way,’’ Ajomale said.

    Meanwhile, NASD has also opened up analyst pages for investment and equity analysts who wish to cover OTC securities. Reports will be specific to each security on admitted to trade and will come with a clear “buy”, “sell” or “hold” recommendation.

    Analysts who have volunteered to submit equity analysis and reports believe this will deepen the knowledge base of the investing public and at the same time give firms the opportunity to advise a wider public.  The first reports are expected to be uploaded before the end of this month.

    “Our vision is to create a market that is accessible throughout West Africa.  We intend to become the hub of first call for capital formation in West Africa and we are guided by the principles of Integrity, Performance and transparency in all our dealings with every point of contact- be they investors, issuers, regulators business partners and especially your good selves,” Ajomale had outlined the vision of the OTC..

    He enthused that NASD would fuel economic growth in the West African sub-region by developing and operating active markets that adhere to the highest standards of performance and principles of integrity while also creating value for its stakeholders and the investing public.

    According to him, by offering more liquidity in investment instruments to the Nigerian capital market, NASD will play a crucial role in the ability of Nigeria to sustain a real growth rate of above seven per cent per year and ensure that desired capital intensive projects can get cheaper and faster access to funding.

  • CSCS grows profit by 56% to N4.8b

    CSCS grows profit by 56% to N4.8b

    Central Securities Clearing System (CSCS) Plc grew its profit by 56 per cent as turnover rose by 34 per cent.

    Audited report and accounts of CSCS for the year ended December 31, 2013 showed that profit before tax rose from N3.09 billion in 2012 to N4.82 billion in 2013. Total turnover grew by 34 per cent from N5.17 billion in 2012 to N6.89 billion in 2013. The company paid a dividend of 22 kobo per share.

    Managing director, Central Securities Clearing System (CSCS) Plc , Mallam Kyari Bukar, said the company achieved good financial results in 2013.

    “Our operating income for the year stood at N6.9 billion, that is a 34 per cent increase from the previous year’s operating income of N5.2 billion. Profit before tax for the year under review was N4.82 billion as against N3.09 billion from the previous year,” Bukar said.

    According to him, total revenue grew by 34 per cent during the year while operating expenditure decreased slightly by one per cent due to efficient cost management approach adopted by the company.

    He noted that the company’s 2013 financial statements was prepared in line with International Financial Reporting Standards (IFRS) as prescribed by the Financial Reporting Council of Nigeria (FRCN) and the Securities & Exchange Commission (SEC), having first adopted the IFRS in 2012.

    CSCS, the clearing, settlement and depository company for the Nigerian stock market, recently listed its shares on the NASD Plc, providing investors with opportunity to trade on their shares.

    NASD Plc is a registered over-the-counter (OTC) trading platform for unquoted securities including equities and bonds.

    CSCS, a subsidiary of the Nigerian Stock Exchange (NSE), listed a total of 5.0 billion ordinary shares of N1 each under the financial industry sector.  CSCS is the 16th securities and eighth financial industry security to be admitted to trade on the NASD.

    With the listing of CSCS on the market, operators and investors can expect to see better price discovery and more transparency around transactions.  It also makes the security more acceptable to portfolio investors who before now only had an informal reference price.

     

     

  • African capital market worth $300b, says CSCS chief

    African capital market worth $300b, says CSCS chief

    African capital markets is worth over $300 billion, the Chief Executive Officer, Central Securities Clearing System (CSCS) Kyari Bukar, has said.

    Bukar, who spoke at the Finance Correspondents Association of Nigeria (FICAN) bi-monthly forum hosted by CSCS , said the on-going West African Capital Market Integration would help boost the market and create more opportunities for investors. He said integration process we have started is going to be in phases.

    He urged investors to be careful in choosing their portfolio managers to ensure their resources are entrusted with credible, efficient and well capitalised operators.

    Bukar, who spoke on the theme: ‘Role of Central Securities Clearing System in the nation’s financial sector,’ said investors needed to be informed about the market and companies where they are putting their capital.

    He said: “The most important thing for a market like this is to have an informed investor. The investors needed to be informed for them to exercise their choices. There is need to enlighten investors to enable them make the right choices for the future.”

    According to him, there is also need for investors to regularly check their accounts with the CSCS, as such would update them on the performance and position of their investments with brokers.

    He said the automation of brokerage business has reduced the cost of operation for most operators. Automation, he said reduces cost of operation for companies.

    “The most important thing is that investors should be in control of their money or go for collective investment scheme. Still, investors need to beware and invest in portfolio managers that are credible, efficient and have all the necessary capital to be in the position to sale their assets,” he said.

    He said both the big and small operators have gone retail, meaning that they can accommodate both big and small investors after getting their processes fully automated.

    “Previously, if it is not large volume, brokers may not efficiently service the system. But with automation of operations, some of the big stockbrokers have through automated system, have realised that servicing the customer, whether they have N1, 000 or N10 billion, is usually the same. Stock brokers now require very little efforts in servicing the investors. There must be a code that the industry must develop to serve all investors,” he said.

    Kyari explained that the CSCS is implementing the transaction cost analysis because it wants to understand the total cost of each transaction to an investor.

    He said investors buy shares to make money and are always concerned about fees and other cost of transaction that follow each deal.

    “Investors pay fees when they are buying shares and when exiting. We need to benchmark ourselves, against other markets. Since foreign investors look at the various markets, and apportion their resources to them accordingly, depending on many criteria, there is need to be competitive with cost,” he said.

    According to him, investors may also be looking at how free or open the market is, how easy it is to go in and out, and the riskiness of the country, especially whether it is democratic or not among other factors.

    He said there are other investors that consider other elements like the transaction costs before they go in.