New securities trading platform will attract investors – Stephen Tetteh

The Central Securities Depository (Ghana) Limited is aiming at securing investors in the capital market while giving them world-class experiences. As a result, it has migrated its trading system onto a new platform, the Millennium Central Securities Depository System (MCSD).  

Maxwell Akalaare Adombila of the GRAPHIC BUSINESS (GB) had a chat with the Chief Executive Officer, Mr Stephen K. Tetteh (SKT), on the development.

He first asked him what it meant to merge the two platforms.

SKT: It certainly means a lot for us and investors. For us, it means we have put in place a system that will enhance the efficiency of our operations and ensure seamless settlement of transactions. 

With the new system, we can now settle both debt and equity on one platform and that means we do not have to operate two systems as we were doing. It reduces the cost of servicing two systems.

It also means that investors will no longer have to keep two accounts; they will just open one account for both debt and equity and that surely allows convenience in trading.

The new system is also more secured – it has enhanced security features and it will help give more confidence to investors that their information is secured with us.

The other thing is; the new system has been linked to the Automated Trading System (ATS) of the Ghana Stock Exchange such that when there is a transaction, we can easily sit here (in our offices) and do the settlement.

Generally, it reduces human contact and that allows for more efficiency and speed. 

By and large, I think that the introduction of the new system means that CSD is well positioned to protect investors, give them a world class experience and grow the capital market.

GB: How modern is this new system and what went into choosing it?

STK: The MCSD, I should say, is the latest trading platform globally. It was introduced in 2014 by the Millennium Information Technology Company, a subsidiary of the London Stock Exchange (LSE), and currently seen as the most secured for transactions like this.

I think we are the first in West Africa to introduce it and the whole idea was to give investors a credible system that they can trust and be comfortable dealing with.

Globally, technology is changing fast and if you do not change, you will end up operating with an obsolete system and that will not entice investors to your market.

Remember we were have been operating the two systems for debt and equity and they were introduced insince 2004 and 2008 respectively.

Because they were different, it made things a bit difficult because you had to keep two accounts for one investor; one for debt and another for equity. 

But with the MCSD, we do not need to do that. When you invest in the two, we will just open a single account for you.

This also gives convenience to our stakeholders, who can now watch the system to interact and do settlements smoothly. 

GB: What role is this new platform expected to play in the growth and development of the capital market and CSD in particular

SKT: Things are changing and everywhere investors go, they will always look out for the areas with less risks and high confidence. They want systems that minimise risks and enhance their returns and that is what this system brings. 

With the new platform in place, I think the CSD is sending a message to investors that we have progressed and Ghana's capital market is now comparable to any in the world.

We expect this to help give confidence to investors and that confidence would translate into increased investments in the market.

Over the years, investor appetite in the market has been increasing and with this new system now in place, we think it will grow even further.

GB: What is the cost of this platform to the CSD and how was it financed?

SKT: It is a lot of money and it involved various payments at certain stages of the system upgrade. Actually, what happened was we upgraded the system into the latest; we did not buy the entire programme. 

If we were to buy the entire system, the cost would have been higher and way beyond us.  and we do not even need the entire system.

So, we made some paymentspaid for engineers,development,  installations, consultations and other logisticsthings like that. The cost was quiet heavy high but at the end of the day, we are happy we have it in place. 

GB: How did CSD fare last year?

SKT: Last year was good. Our financial results are ready and it shows that we made some good profit. 

Investor account openings also increased. A total of 116,260 new investor accounts were opened for debt and equity investors. With the merging of the debt and equity accounts, we may have to reconcile the accounts and close those that are duplicated. This may reduce the total number of accounts generally. We will have a clearer picture of the total number of investor accounts after we are done with the reconciliation. but with the merger, following the coming into force of the MCSD, the accounts may reduce if we finish with the reconciliation.

Our dematerialisationdematerialization of certificates also continued and as at December, last year, 8.7 billion shares had been dematerialised. 

This represented about 88.7 per cent of the 9.8 billion listed shares in the country.on the Ghana Stock Exchange.

We are still encouraging people to come and convert their share certificates into electronic form so that they can avoid the challenges that come with holding paper certificates. 

with damage, misplacement and things like that. 

I think the corporate investors have responded positively and have dematerialiseddematerialized but the few out there are the individual ones, who hold a few in bitsfew shares.  but Wewe  are confident that with time, all we will be convertedable to increase  the surrender of certificates. We are aiming at 100% dematerialization in the next few years. 

GB: What are the benefits of dematerialisingdematerializing one’s share certificates?

SKT: The benefits are many. When you convert, you are guaranteed of safety and convenience of your holdings. You avoid the problems associated with paper such as theft, destructions, cloning and even monitoring your holding. With demat you keep all your shares in one account.

Also, when you dematerialise, it makes it easier for you to use your holdings as collateral to secure facilities from financial institutions.

Some of our customers have started doing it and the banks love it. It is more convenient than using properties. and Aall you need to do is to instruct us and we will hold the assets in lieu until the two sides agree that the payment has been settled for us to unfreeze it.

GB: What is general outlook of capital market in the country?

SKT: I think the market is growing and interest is picking up but there is still room for improvement. What we see is a lot of the domestic investors are interested in the short term securities like the treasury bills, bonds and things that last for some few years. The foreign investments come in for the long haul.

As a country, I think we need to do more to increase investments because if you have 25 million people, with an adult population of about 10 million yet those who invest are still far less than a million, then you will appreciate that although there has been improvement, it is still a drop in the ocean.

We need to step up education and that is what the CSD has been doing. We are happy the Securities and Exchange Commission has launched the Capital Market Week and the Ministry of Finance is also starting a financial Literacy Week. These things are needed to tell people that they are better off investing in the capital market. than saving.