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SEC laments as investors shun direct cash settlement initiative

By Nkiruka Nnorom

Investors have shunned the Direct Cash Settlement, DCS, introduced by the Securities and Exchange Commission, SEC, and the Nigerian Stock Exchange, NSE, to end the incidence of unauthorised sale of investors’ shares.

Lamenting this development, Ag Director General of SEC, Mary Uduk, said that only 1,191 investors have subscribed to the initiative out of 5.1 million accounts domiciled in the Central Securities Clearing System, CSCS.

Nigerian Stock Exchange

DCS is an initiative that allows proceeds from sale of investors’ shares to settle directly into their account as against the system whereby the proceeds go to the broker’s account before passing it to the investor. The DCS, which commenced last year, has been voluntary, but was made compulsory by the Commission starting from September 2017.

Speaking at the post Capital Market Committee (CMC) first quarter media briefing, Uduk called for collaborative effort among all stakeholders in the market to achieve the objective of the DCS, noting that only 15 out of 18 settlement banks have contributed to the DCS initiative so far and called for collaborative effort among all stakeholders in the market to achieve the objective.

“Considering the fact that DCS will instill confidence in the market, there is the need for all parties involved in the process to work harder to achieve a 100 percent migration,” she said.

She said SEC is working with various trade groups and other Self Regulatory Organisations, SROs, in the market to adopt electronic Initial Public Offerings, IPOs.

She said: “Globally, the capital market is working towards electronic IPOs and the Nigerian capital market is working to adopt this trend. A Committee comprising of the SEC, NSE, the Association of Stockbroking Houses of Nigeria, ASHON, Chattered Institute of Stockbrokers, CIS, the CSCS, Institute of Capital Market Registrar, Capital Market Solicitors, Fund Managers Association of Nigeria, FMAN, and the Nigeria Interbank Settlement System,NIBSS, has been set up to work on modalities for issuance of e-IPOs.

Additionally, she noted that a total of 2.5 million accounts, translating into 466,000 unique investors’ accounts have keyed into the e-dividend registration initiative, while saying  that distribution of e-Annual Report and Accounts for quoted companies has since commenced.

She informed that though some shareholder groups have raised concerns, the one year pilot phase would continue while the commission deliberates on the concerns raised so far.








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