Central Securities Clearing System (CSCS) Limited is a subsidiary of The Nigerian Stock Exchange (NSE) as well as the clearing house of The Nigerian stock Market. It was incorporated on July 29, 1992 and commenced operations on April 14, 1997.
In 1989, the Federation of International Stock Exchange (FIBV) of which The Nigerian Stock Exchange is a member endorsed the recommendation of the Group of Thirty (G.30), a private sector organization, which studied the Global Financial Market. One of the aims of the study was the felt need to improve the efficiency and effectiveness of the clearing and settlement systems which are essential to sustained growth of any capital market.
There were, admittedly, inherent bottlenecks that adversely affected all capital market operators in Nigeria. In particular, there was the difficulty associated with the transfer of shares and production of new certificates for traded securities. This usually took several months to conclude.
Also, the processing of transaction done on the floor of The Nigeria Stock Exchange was done manually which had continued to create delays in deliveries.
In order to prevent these bottlenecks, The Nigeria Stock Exchange incorporated a subsidiary company, the Central Securities Clearing System (CSCS) Ltd to implement a computerized Stock Exchange Management System (SEMS). The emphasis of this initiative was the dematerialization of share certificates in a Central Securities Depository (CSD) and the elimination of the unnecessary difficulty between registrars and company executives in issuing new certificates to investors.
Concepts of CSCS Ltd
The concept of Central Securities Clearing System Ltd provides for an integrated central securities depository (CSD), clearing (electronic/book-entry transfer of shares from seller to buyer) and settlement (payment for bought securities) for all stock market transactions. All securities listed on The Nigerian Stock Exchange must have their certificates deposited in CSCS before transaction can take place on them on the floors of The Nigerian Stock Exchange.
The transactions are processed and concluded within four (4) days (i.e.T+3) in electronics book entry form. Dematerialized certificates are recycled to the registrars for scrutiny and retention. CSCS sends transaction up-date to relevant registrars to constantly up-date the registers of members of listed companies.
- We provide Central Depository for all share certificates of quoted securities including new issues.
- Securities not quoted on The Nigerian Stock Exchange can be deposited with CSCS Ltd for safe keeping (custodianship) as well as certificate for foreign investors. Stanbic Nominee Nigeria Ltd in association with Standard Bank Transvaal (PTY) is a custodian to CSCS.
- We are sub-registry for all quoted securities in conjunction with the registrars of quoted companies. Shareholders can always ascertain their holdings held electronically in particular security by requesting for a statement from CSCS Ltd through their stock broking firms.
- We also function as clearing and settlement of stocks market transactions.
- We carry out the issuance of Clearing House Numbers and Account Numbers to stockbrokers and investors.
- We function as a custodian agency in conjunction with registered custodian for local and foreign instruments.
- We carry out a custodian function as well as the retrieval of data messages electronically.