- Central Securities Identification Number to Stakeholders
The Central Securities Clearing System Plc has issued to date over 4.2 million Clearing House Numbers to Stakeholders who now buy and sell shares on the floor of the NSE directly connected to CSCS system
- Clearing and Settlement of Transactions
Before CSCS, there was the difficulty associated with the transfer of shares and the production of certificates for traded securities between stockbrokers and the registrars. It usually several months to conclude, but with the advent of CSCS Plc, transaction circle is now T+3 (Three working days after transactions).
The CSCS system operates a T+3 settlement circle for transactions on The Nigerian Stock Exchange floors in conformity with the practice in emerging markets. The T+3 settlement circle is facilitated by the immobilization of share certificates in a central location, which in turn enables trades to be processed in an electronic book-entry form. In effect, physical delivery of share certificates to fulfill settlement obligations has been replaced by electronic credits and debits to shareholders stock position.
- Agreement with Settlement Banks
CSCS has agreement with twenty-two (22) settlement banks for settlement of transactions/trades that occur on the floor of The Exchange through the Nigerian Inter-Bank Settlement System (NIBBS). All stockbroking firms maintain Trading Account with any one of the Banks to facilitate settlement of transactions/trades. This ensures that funds are available for the settlement of obligations entered into.
- Investor Information
The CSCS Plc issues monthly statements of stockholdings to investors. An average of 3,000 stockholders request for statements of stockholding monthly.
- Issuance of Share Certificates
The gradual and voluntary immobilization of share certificates at the CSCS will culminate in the dematerialization of The Nigerian Stock market in the near future. Whereas over 1.2M shareholders as at today use the CSCS system, only 1,100 of them have requested for certificates to be issued to them.
The CSCS has commenced custodial/safekeeping service to institutional and high net-worth individual investors to encourage these classes of investors who prefer such kind of service. Quoted companies on The Exchange can now issue share in form of Global Deposit Receipts (GDRs) or American Deposit Receipts (ADRs)
Benefits of CSCS
- Reduces the incidence of loss or stolen certificates/late delivery of certificates
- Reduces investment risk and creates opportunity for speculation.
- Reduces cost of maintaining register of shareholders.
- Increase liquidity of stock
- Increases transparency of market
- Raises investors' confidence in the market
- Increase market turnover
- Encourages foreign investment
- Increases liquidity and vibrancy of the market Stockbroking firms
- Prompt inter-broker money and stock settlement
- Increase efficiency and profitability of stockbroking
- Reduces operating costs.