The Acting Director-General of the Securities and Exchange Commission, SEC, Mary Uduk has lamented the continued apathy of investors in registering for the Direct Cash Settlement, DCS, introduced by SEC.
The Ag.D-G disclosed this while speaking at the post-Capital Market Committee (CMC) first quarter media briefing. She noted that only 1,191 investors have subscribed to the initiative out of 5.1 million accounts domiciled in the Central Securities Clearing System, CSCS.
What the Direct Cash Settlement means
The Direct Cash Settlement initiative which commenced operation on January 4, 2016, is a process where cash proceeds from trades executed by brokers on the exchange settle directly into investors’ bank account.
The process starts when a client gives his broker the mandate to sell his or her shares and once those shares are sold, payment is made directly into the client’s account.
This is in contrast to the current practice where proceeds from the sale of securities are paid directly into the stockbroker’s account and stockbrokers then deduct transaction fees and remit the balance to the client’s account.
Historically, issues have risen on occasions where the proceed from the sale were not remitted into the clients’ accounts, thereby necessitating the need for the new initiative.
Uduk, however, called for a collaborative effort among all stakeholders in the market to achieve the objective of the DCS, noting that only 15 out of 18 settlement banks have contributed to the DCS initiative.
In her words:
“Considering the fact that DCS will instill confidence in the market, there is the need for all parties involved in the process to work harder to achieve a 100 percent migration.”
She also noted that a total of 2.5 million accounts, translating into 466,000 unique investors’ accounts have keyed into the e-dividend registration initiative.
In addition, she noted that SEC is working with various trade groups and other Self Regulatory Organisations, SROs, in the market to adopt electronic Initial Public Offerings, IPOs.
The Securities and Exchange Commission (SEC), Nigeria is the apex regulatory institution of the Nigerian capital market and is supervised by the Federal Ministry of Finance.
