Financial securities players happy with sector regulation

Players in the financial securities market have commended the level of regulation and operational frameworks put in by depository operators of the securities market in Ghana -- the Central Securities Depository.

The CSD is now a single depository after two depositories -- namely the Central Securities Depository Ghana and the GSE Securities Depository Company -- merged in January this year. The merger of the two has been accompanied by relevant legal framework to safeguard operations of the market.

William Sowah, Head, Investor Services, Transactional Products and Services of Stanbic Bank Ghana Limited, in interview with the B&FT said Ghana’s securities market has much of the requirements and regulatory framework serious investors look for in an economy.

“We have a forward-looking securities market, and we also have a securities market that has forward-looking regulators in the Securities and Exchange Commission (SEC). There are clear guidelines for operations in the sector,” he said.

The Central Securities Depository Act 2007, Act 733, provides the legal framework for operations of the depository. The Central Securities Depository is regulated by the Securities and Exchange Commission (SEC) under the Central Securities Depository Act 2007, Act 733. The day-to-day activities of the CSD are thus governed by the CSD rules and procedures.

Speaking on the Central Securities Depository’s role, Mr. Sowah indicated that the CSD plays a crucial role in attracting investors, especially, from the international financial market.

“Stanbic provides services to both institutional and retail investors through our custody, brokerage and asset management outfit. The CSD infrastructure is critical to the services we provide, especially to our international clients. Very few international clients will invest in a market where there is no functioning depository, as regulators continue to emphasise asset segregation and separation of proprietary holdings from client holdings. We maintain securities accounts in the CSD for investors who access the market through us.

“The CSD is a critical requirement of any emerging market. For instance, the CSD electronic pledging module provides a platform that aids collateral management. Investors can pledge their securities held in the CSD as collateral without having to physically deliver the certificate to the lender.

“The dematerialised system also allows market participants to hold their securities at one location where they can be available for clearing and settlement. It is usually done electronically, making it much faster and easier than was traditionally the case when physical certificates had to be exchanged after a trade had been completed,” he added.

He said he is also impressed with the proactive and consultative approach used by the depository in developing its development plan, which aims to improve efficiency and risk mitigation in the market.

“I am aware that the CSD is finalising its 5-year development plan, with focus on improving efficiency in its delivery to the market. I am impressed by its consultative approach in this exercise which gives assurance to stakeholders that its development agenda is user-driven,” he noted.

William Sowah further urged investors to allay any thoughts of insecurity in the system, saying: “This is much safer than the paper environment. Under the CSD system, there is total elimination of risks such as the loss, mutilation or theft of certificates associated with holding and trading investors’ paper-based securities”.