CSCS achieves 98.4 percent dematerialization success rate
The Central Securities Clearing System (CSCS) Plc has disclosed that 98.4 percent of shares quoted on the Nigerian Stock Exchange are now available in an electronic format in CSCS depository, leaving only 1.6 percent of share certificates still in physical certificate form.
This disclosure was made recently by Mr. Joe Mekiliuwa, General Manager, Operations at CSCS during an interactive session with the capital market stakeholders in Lagos.
Mr. Mekiliuwa said that CSCS is working assiduously with Registrars to ensure that full dematerialization is achieved before the end of 2016’s third quarter..
His words: “efforts are geared towards assisting the relevant Registrars to ensure that the remaining 1.6 percent although seemingly infinitesimal, is firmly attended to so as to achieve 100 percent success rate before the end of quarter three (Q3)”.
According to him, in order to address various problems associated with share certificates such as delay in issuance, verification, loss, theft, forgeries amongst others, the Securities and Exchange Commission (SEC), in partnership with other stakeholders, resolved to eliminate these problems by opting for the full dematerialization of share certificates.
Full dematerialization is the complete elimination of existing physical share certificates in the Nigerian capital market and putting to an end the issuance of new share certificates. The Registrars of companies, who are involved in the implementation process, are required by Securities and Exchange Commission (SEC) to turn in the registers of all companies they manage to CSCS Depository within a given period of time.
A statement issued by CSCS noted that “In compliance with SEC’s directive, Registrars have turned in 98.4 percent of the registers they manage and the shares are therefore held in the shareholders’ accounts in CSCS Depository in the custody of the respective Registrars. For the shares to be accessed by the shareholders in their accounts under a stockbroking firms, shareholders are required to instruct their registrars, through their brokers, to migrate such shares to their accounts with the stockbroking firms.
“Consequently, shareholders are urged to approach the stockbroking firms of choice, obtain and fill a migration form which will be forwarded to the Registrar to enable them advise CSCS to migrate the shares to the shareholder’s account with the stockbroking firm and the shares are migrated by CSCS as advised.
With reinforced commitment and determination at the commencement of the dematerialization exercise in June 2015, it has yielded significant success as incidences of forgery, theft and loss of share certificates have been eliminated.”
Other benefits which full dematerialization would bring to the market include immediate availability of the shares for trading as soon as mandate is given to the brokers, enhancement of price discovery and deepening of the market, possibility for securities lending and borrowing by shareholders for more income.
