Thomas Murray, the global post-trade risk and custody specialists, has upgraded its rating of the Central Securities Clearing System (CSCS) Plc from A to A+, which denotes a ‘low’ overall risk. Thomas Murray maintains proprietary assessments of over 140 Central Securities Depositories (CSDs) globally as part of the Thomas Murray Depository Risk Assessment services.
The overall assessment of ‘A+’ reflects a weighted average of seven risk components. The assessment for asset servicing risk has been omitted from the overall risk assessment since CSCS takes no active part in the entitlement calculation or processing of corporate actions in the market.
The outlook for the CSCS risk assessment is ‘positive’ owing to the fact that there are numerous pending developments scheduled for implementation within the short to medium term. Official time schedules have not been announced in all cases, but it is anticipated that, upon implementation, these developments have the potential to improve the risk assessment of CSCS.
According to the report, one of such developments include the organisation becoming a direct member of the Central Bank of Nigeria (CBN) RTGS system, ensuring that DVP settlement would be realised for both on-exchange and OTC transactions by linking the securities leg and cash leg of settlement. CBN approval would be required prior to establishing a link meaning that the timeframe for this would be largely dependent on the CBN.
Managing Director, Central Securities Clearing System (CSCS) Plc, Mr. Haruna Jalo-Waziri, said the upgrade from A to A+ was a significant milestone towards being a globally respected and leading central securities depository in Africa.
“The key upgraded areas further indicate that we have made notable improvements in managing our market’s overall risks as we increasingly continue to align ourselves with global best practices. I am extremely proud of the collective efforts made over the years by our committed staff to enable us to make such progress,” Jalo-Waziri said.
Director, Head of Operations, Thomas Murray, Mr. Jim Micklethwaite, said the upgrade across several areas recognised the significant and widespread improvements to processes and controls put in place over the last few years by CSCS, particularly due to the upgraded functionality within its new core system, TCS BaNCS.
“We will monitor CSCS’ improvements as they continue to adopt international best practices,” Micklethwaite said.
He explained that the CSD risk assessment reviews and assesses the risk exposures for investors associated with the processes the CSD has in place to facilitate the safekeeping and the clearing and settlement of securities, where applicable. It assesses eight key risks.
The methodology considers the capabilities of the depository and the quality and effectiveness of its operational infrastructure. It also assesses the depository’s willingness and ability to protect its participants or clients from losses.
As part of the assessment, the scope and quality of the depository’s services is assessed. The assessments are on a consistent global scale, using the familiar AAA to C grading scale. Once the grading is assigned there is an ongoing surveillance process to monitor the depository.
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