Securities depository services chalk 10-yr milestone

It has been 10 years since securities depository services were introduced into the country. Our reporter, Maxwell Akalaare Adombila (GB), caught up with Mr Stephen K. Tetteh (SKT), the Chief Executive Officer of the Central Securities Depository Ghana Limited (CSD), for a chat on the company's operations and the industry as a whole.

GB: How is the CSD doing?

SKT: The CSD is doing well, it is performing well. We have grown over the years considering where we came from 10 years ago and where we are now. So, all in all, we are progressing.

GB: What does the CSD do in Ghana? 

SKT: Basically, the CSD maintains records of the ownership of securities. Any investor who invests in securities; buys shares or bonds, the person opens an account with us and we maintain it on his/her behalf. We also do the transfer of ownership, if the investor trades the securities on the stock exchange by taking the securities from the seller’s account and crediting it to the buyer’s account, which is called settlement of securities.

GB: For the investor who trades in these securities, how important is CSD to the person's business? 

SKT: I can say very important because before its introduction 10 years ago, we were doing paper certificates and so if you bought securities, you were given a paper certificate to indicate your ownership. If you wanted to sell, you had to give up the old certificate and a new one was made for the new owner. All these were very laborious and a lot of things could happen to the certificate; it could get missing, defaced, burnt or stolen apart from the cost involved in issuing that paper, signing it and authenticating it. All these things added to the cost of the transaction and even if you wanted to sell it, it would take time for the paper to be authenticated before you could sell.

But with the advent of the CSD, it changed everything to electronic maintenance and so if you sell your securities, we just  debit your account and then credit the account of the buyer. We also take the money from the buyer and give to the seller. So, all these transactions can be done in a matter of minutes instead of you having to wait for three or so months to get paid for selling your securities or receiving your ownership. We can now do it within a very short time as soon as the transaction is completed on the exchange

Also, with the system that we have, everything is automated and so all the risks associated with the paper transaction are eliminated. So, as an investor, especially the international and institutional ones, you should be very happy that the CSD is there. Of course, no serious investor will go to a market where there is no CSD because they know its importance.

GB: In 2003, you announced the merger of the Ghana Stock Exchange (GSE) Securities Depository and Bank of Ghana (Bog) one into this CSD we now have. What informed that decision and what has been the impact on the industry so far? 

SKT: We mentioned that our market is too small to maintain two depositories. Maintaining automated systems is expensive because you have to pay for running that system. So, once we merge the two systems, we believed that the cost of operation has reduced. For the investor and the participants; the brokers, the dealers and other people who are part of this transaction also have one-stop shop to deal with instead of dealing with two institutions and that will reduce their transaction cost too because they only need to register at one point and will have access to all the system.

We also think that the two shareholders; the GSE and the BoG can easily pool their resources together to develop the depository faster instead of dissipating them into two institutions. So, that has been the rational and it has gone on well so far.

GB: So, has the merger process ended or it is still ongoing? 

SKT: It has not ended. Right from the beginning, we had three projects that the board of the company approved and we gave ourselves one year to complete.

The first was to move the data into a single platform so that the equity data and the bond data will reside in one platform. The second was to interface the depository with the Ghana Stock Exchange trading system so that the two systems can talk to each other and the final one was to install an upgraded version of the platform that can support so many additional functions.

We were given one year transition period which ends in December 2014 and so we still have three months to go. We will be able to complete two of the projects; migrate the two data into a single platform and interface the trading system. However, we may not be able to complete the upgrade; the installation of the higher version of the platform on which the system runs because that one involves a substantial work and so it may be pushed to 2015.

GB: These three projects involve a lot of work. So, how much are you investing in them, totally? 

SKT: For now, I will not be able to tell you but yes, it involves a lot of money because technology involves a lot of money. Technology is expensive. There are a number of things that go into it and even if I tell you now, it may change in the course of time. However, because we want to drive the market forward, the board has approved it and we should be able to install and operate a system that will be comparable to any system anywhere. we will find the money to do it. We want to be competitive and we will look for what is available now and find the money to get it done.

GB: As the CEO, what is your vision for the CSD and the market in general?

SKT: My vision is to be able to help develop an institution in the Ghana financial market that will be able to attract investment into the country. 

We want to be able to have an institution that can deliver value to shareholders and to operators; the brokers and investors. So, I look forward that in the next three to five years, we should be able to have an institution that is well run with qualified staff that will be able to satisfy the market in a very cost effective way. 

Overall, my vision is that in the medium to long term, we should be able to have an institution in the capital market that is comparable to other international systems to attract investments into the country.

GB: What is your message to your stakeholders; shareholders, the investors and brokers? 

SKT: My first message is to shareholders; Ghana as a country has a depository that facilitates transactions in securities in an electronic form which they can use by bringing their certificates to be converted into electronic accounts. So, all those shareholders who are still keeping their certificates, I want to tell them that we have a very effective and efficient way of managing their accounts and that they should bring their certificates and open accounts with the depository.

My other message is to businesses outside the capital market. I want them to know that the capital market is the cheapest way of raising money to expand and so they should use the market; list on the GSE and open accounts with the CSD so that we can grow the market and the country together. I think capital is available in the country but it is only for people who know how to access it; issue bonds or list on the stock exchange to raise money so that together we can raise money to develop our economy. Also, those keeping their monies in their bedrooms should bring it because others need funds. Simply put, those who have funds should bring it on the market and those who need it should come and raise it.

GB: Who is Mr Tetteh?

SKT: Chuckles. Eeeerm Mr Tetteh is the chief servant at the CSD and makes himself available for the company by bringing my mind and experience to ensure that the company operates in a way that is expected of us by shareholders, board, stakeholders and the public at large. So, Mr Tetteh is here to offer everything that he has for the development of the company first and then generally for the country.

GB: How long had you worked with the BoG prior to being made the CEO of the newly formed CSD last year? 

SKT: I worked with the BoG for 29 years, served in various departments of the bank, including research, banking and then spent two years on secondment at the West Africa Monetary Institute (WAMI).I was part of the team that coined the name Eco as the expected currency for West Africa. After that, I returned to the bank and was involved in the payment system project. We started the MICR Codes for cheques and the introduction of credit clearing. These projects developed into the Ghana Interbank Payment and Settlement System (GhIPSS). Then when the CSD was set up in 2004 then as a department in BoG, I was picked to head it. In 2010, it was made a wholly-owned subsidiary of BoG and that made it a separate company. In 2013, the merger made it what it is today and now I am the head of this newly formed CSD, a company owned by the BoG and the GSE.

GB: Thank you so much Mr Tetteh

SKT: Thank you too.

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