CSCS: The Backbone of the Nigerian Capital Market – Enhancing Efficiency, Safety, and Growth

Precious Ugwuzor 

The Central Securities Clearing System (CSCS) Plc has undoubtedly been playing a significant role in the Nigerian capital market by facilitating the transfer of excess capital from investors to businesses or government agencies in need of funds, thereby promoting sustainable economic growth in Nigeria. 

As the leading financial market infrastructure in the country, CSCS has taken the lead in developing innovative solutions, collaborating with other capital market operators both locally and globally to redefine market operations, and leveraging new technologies to enhance efficiencies across the entire transaction life cycle.

Being at the forefront of pioneering innovative solutions…

CSCS has made significant strides in pioneering innovative solutions within the Nigerian capital market. Among their achievements is the development of an Online Portfolio View. This tool allows investors to monitor their stock portfolio in real-time, providing them with a bird’s eye view of their investments within the depository. Also, CSCS introduced the X-Alert messaging service, which provides real-time information on all trading activities on an investor’s account. This has put an end to the issue of unauthorized sales of investor’s securities without mandates. 

Another innovative solution by CSCS is the Collateral Management Solution. This system offers a flexible and efficient workflow for financial institutions to handle complex loan collateralized activities. Clients benefit from an efficient workflow, with all information gathered in one system, reducing operational risks.

CSCS partnered with other capital market institutions to deepen the market through initiatives such as 100% dematerialization of share certificates within its depository. This milestone addressed problems associated with share certificates, such as delays in issuance, verification, loss, theft, and forgeries. The successful dematerialization of share certificates was achieved with the unwavering leadership of the Securities Exchange Commission, that ensured the completion of the exercise. 

CSCS is also part of the ongoing West African Capital Markets Integration Council (WACMIC), a strategic partnership of relevant capital market operators working towards the integration of West African capital markets. This partnership will develop larger capital markets that will enable capital formation for leading institutions and governments; amongst other benefits.

Transforming the market with technological efficiencies…

In redefining the operations of the Nigerian capital market, CSCS harnessed modern technologies such as Application Programming Interfaces (APIs), self-service portals, and chatbots to drive efficiencies throughout the transaction cycle. Through the deployment of APIs, there has been a reduction in the turnaround time for Stockbroking and Custodian communities in their account creation and share detachment processes. 

Additionally, CSCS introduced RegConnect, a self-service portal designed for the Registrar community to simplify their daily activities, maintain accurate registers, and ensure secure transmission with a Token authorization mechanism. This platform also allows for seamless integration and validation of all data submitted.

Furthermore, CSCS launched the Issuers’ Portal, a user-friendly platform designed to provide the issuer community with access to comprehensive market performance analytics of their listed shares traded across exchanges within a specified timeframe. This portal enables issuers to gain insights into daily changes in their shareholders’ registers. 

In maintaining operational excellence, CSCS is developing a chatbot solution to improve their customer support services. This solution will create a seamless communication channel with business clients, allowing CSCS to efficiently manage their requests and provide real-time responses, enhancing overall customer experience.

Beyond business operations…

Beyond its traditional roles, CSCS offers auxiliary services that create additional value for clients through Electronic Document Management Solution (EDMS). This solution provides an easy, intuitive, and cost-effective way for institutions to manage large volumes of digital documents stored centrally, which can be accessed within seconds, thereby enhancing operational efficiency. 

CSCS acknowledges that all investments made towards digital transformation and technological efficiency may be at risk if cybersecurity is not given much consideration. As a company with various technology touchpoints, there is a high priority on cybersecurity due to the potential vulnerability of valuable technological assets to cyber threats. Therefore, CSCS is committed to leading cybersecurity advocacy by organizing webinars and conferences to discuss topics on the latest trends, best practices, and challenges in the cybersecurity space.

Management’s perspectives

Commenting, the Managing Director/Chief Executive Officer of CSCS, Haruna Jao-Waziri said: “CSCS is an important entity that is critical for safe and efficient securities markets in Nigeria. We started operations some 25 years ago when we manually operated register of securities accounts but today, we have a fully-fledged automated system with minimal human interference. 

“With huge investment in technology and human capital, CSCS has made significant progress, sanitized the capital market, reduced transaction cycle from T+5 to T+3, and restored investors’ confidence. 

Similarly, the Executive Director, CSCS, Adeyinka Shonekan said the business diversification from its core capital market activities has helped to deepen its resources to the benefit of the company’s stakeholders. According to Shonekan, “Leveraging our rich experience in the capital market and our established reputation, we introduced the EDMS services that creates a paperless office environment while our Collateral Management simplifies the process of lending between borrowers and the lending institutions”.

Business stakeholder’s perspective…

The success of CSCS in meeting their business objectives is owed to the trust and confidence of their esteemed stakeholders. These stakeholders have entrusted CSCS with their businesses and have constantly challenged them, firmly believing in their ability to create value in facilitating securities depositories, clearing, settlement of transactions and other businesses within the financial services industry.

According to Tajudeen Olayinka, the CEO of Wyoming Capital and Partners, CSCS is a significant catalyst in the market. Similarly, Tunde Bamidele, an analyst at Cordros Securities Limited, emphasized the critical role of CSCS as the clearing house in securities trading for the effectiveness and efficiency of trading and settlement activities. 

Bashir Saheed, the Managing Director of Meristem Stockbrokers Limited, also commended CSCS as a catalyst that enables quick and efficient trade execution and settlement on the NGX and in the wider capital market ecosystem.

This firm commitment by its stakeholders further strengthens CSCS’ resolve to remain dedicated to their business objectives.