CSCS Canvasses Strong Financial Market Infrastructure

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The Central Securities Clearing System has stressed the need for a strong financial market infrastructure, saying it will contribute to the stability and growth of the financial system as a whole.

It likened a well functioning financial market infrastructure to the human backbone, explaining that it would ensure fast and smooth movements, channel relevant information-settlement information, protect the channels for the transmission and reduce risk.

Problems in the financial market infrastructure, the CSCS said, could lead to dysfunctions in the financial market, which meant lack of options for transactions; misleading information and disturbed information channel; and systemic risk.

It listed financial market infrastructure to include payment system (sets of instruments, infrastructure, procedures, and rules for the transfer of funds; central securities depository (providing securities accounts, central safe keeping services, and asset services); securities settlement system (enabling securities to be transferred and settled by book entry according to a set of predetermined multilateral rules).

According to the firm, it also involves central counterparties (which interposes itself between counterparties and contracts traded in one or more financial markets through innovation; therefore ensuring the performance of open contracts); and trade repository (an entity that maintains a centralized electronic record of transactional data).

The CSCS, this year, said it would increase automation and improve efficiency in the Nigerian capital market with the deployment of the TCS BaNCS, a world-class multi-asset class solution for securities depository, clearing and settlement.

The solution replaced the NASDAQ Equator which had been in use since inception of the company in 1997.

The solution change, according to CSCS, is core to the company’s business transformation initiatives which aim at improving efficiency in depository, clearing and settlement services.

“This is a significant milestone for us and a demonstration of our commitment to bring excellent customer service delivery and efficiency to the Nigerian capital market,” it said.

“We are proud of this achievement and confident that the new solution will be beneficial to the teeming market participants in particular and the Nigerian capital market in general,” it added while urging the market to take advantage of the enormous opportunities the new platform offered.

While listing some of the opportunities available on the platform, the CSCS said that TCS BaNCS, as a market infrastructure, would drive Straight-Through Processing by providing the unique ability to support multiple markets and asset classes on the same platform. It would also support various types of account ownership structures such as the Segregated Depository Account, Nominee/Special Purpose Vehicle Accounts and Custodian Accounts.