Direct cash settlement is mandatory from Sept.1 – SEC
NAN-HE -7
Settlement
By Chinyere Joel-Nwokeoma
Lagos, May 10, 2017 (NAN) The Securities and Exchange Commission (SEC) says Direct Cash Settlement (DCS) will become mandatory for all investors on the Nigerian capital market from Sept.1.
Mr Mounir Gwarzo, the SEC Director-General, disclosed this at the 2017 First Post-Capital Market Committee (CMC) news conference in Lagos on Wednesday.
Gwarzo said the measure was to improve transparency, trading velocity, entrench investor’s confidence and reduce market infractions.
The News Agency of Nigeria (NAN) reports that the policy entails “when an investor offers some shares for sale, the proceeds would immediately be credited into the investor’s bank account instead of through the broker.”
Gwarzo said that the committee introduced the DCS last year.
“We introduced it to be voluntary, but when we saw some of the recent events in the market, the committee decided to make it compulsory for every investor.
“We have agreed that by Sept. 1, DCS will be mandatory for every investor, meaning that every investor will key into DCS unless the investor decides to opt out,” Gwarzo said.
Gwarzo said that the DCS would reduce illegal sale of shares and promote transparency in the market.
The director-general said that the commission would pursue its financial literacy campaign to make Nigerians know more about the capital market and ways to invest.
Gwarzo said the commission would also ensure that capital market programmes were included in school curriculum from primary school to make students conversant with capital market operations.
He said that the road map for the financial literacy campaign would be launched very soon.
On transaction cost, he said that the SEC, the Nigerian Stock Exchange (NSE) and the issuing houses had agreed to slash transaction costs to encourage new issues.
Gwarzo said that transactions cost was being reviewed to encourage issuers to access the market rather than borrowing from banks.
“NSE, SEC and issuing houses have agreed to reduce transaction cost and this is to ensure that issuers were more encouraged to come to the market for fresh funds,” he said. (NAN)
JNC/JI/TA
Editing by Joseph Idika/Tajudeen Atitebi