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Business News of Tuesday, 12 May 2015

Source: B&FT

CSD makes giant strides after merger

The Central Securities Depository (CSD) has made significant progress over the last year since the merger of Bank of Ghana-owned Central Securities Depository and the Ghana Stock Exchange Securities Depository a year ago.

The merged depository’s operating income more than doubled from GH¢5.4million in 2013 to GH¢11.2million in 2014. Total assets stood at GH¢12.1million from GH¢8.5million in 2013, representing an increase of 41.43 percent. The year ended with profit after tax of GH¢2.7million as compared to GH¢1.8million recorded in 2013.

The objective of the merger, according to Chief Executive Officer of the CSD, Stephen Tetteh, was to bring efficiency into the capital market through the reduction of transaction costs and to harness the two shareholders’ resources to expand the infrastructure.

Since the merger, Mr. Tetteh pointed out, the Ghana Stock Exchange has increased its shareholding from an initial 18 percent to 30 percent in the merged company -- thereby reducing the Bank of Ghana’s share from 82 percent to 70 percent.

As at the end of 2014, the depository opened 647,212 accounts for investors in Government of Ghana securities and 82,481 for shareholders in equity.

Mr. Tetteh noted that the depository has converted 8.5billion shares that were hitherto in paper certificates into electronic shares, representing 85 percent of all shares listed on the Ghana Stock Exchange.

“The value of GoG securities outstanding in the Depository totalled GH¢28.16billion at the end of 2014, of which foreign investors hold about 25 percent. We supported borrowings among banks through repurchase agreements to the tune of GH¢195.8billion in 2014.”

He added that the GoG issued GH¢47.08billion of securities through the auction system managed by the Depository. “In addition, we processed and paid a total of GH¢50.7billion to more than 1.2million beneficiaries in interest and maturities of Treasury bills and bonds”.

In pursuit of migrating all securities -- both debt and equity -- onto a single platform to deliver value to its shareholders and clients, the depository will upgrade its operating platform; develop a five-year strategic plan; and redesign its corporate website.

In line with these objectives, Mr. Tetteh said the depository has signed an agreement with Millennium Information Technologies of Sri Lanka -- a member of the London Stock Exchange Group -- to install a state-of-the art CSD platform that is comparable to any CSD platform anywhere in the world, and is capable of handling expanded functionalities in anticipation of the introduction of more capital market products onto the Ghana markets.

The new platform, he pointed out, can handle securities’ lending and borrowing; collateral management; risk management; derivatives; and has the tools that will allow investors to have on-line access to their accounts.

Mr. Tetteh added that the platform will be completed by the end of October 2015, whereupon the new system will interfaced with the Automated Trading System of the Ghana Stock Exchange and the Real Time Gross Settlement System (GIS) of the Bank of Ghana for straight-through processing of transactions.

“It will also be linked to all the dealers including all banks, brokers, custodians and registrars. When the platform is completed, investors will hold their shares and Treasury bills and bonds in a single account.”

He added that the development of a five-year Strategic Plan (2015-2019) will drive the vision of the depository to become a world-class institution. “The restated vision of the depository is to be a global provider of efficient and reliable post trade services playing a pivotal role in the financial market in Ghana.”

Mr. Tetteh added that the depository plans to establish strategic alliances with international securities depositories that will help it enter the European and African capital markets. “Discussions have already started with the London Stock Exchange to sign an MoU to that effect.”

“This year we plan to organise a number of public fora and investor education to increase the general public’s awareness of our services.”