Settlement cycle for secondary market transactions changed

The Central Securities Depository (CSD) Ghana Limited has changed the settlement cycle for secondary market transactions in debt securities issued and traded in the country.

Effective Monday, September 14, trades done on the Ghana Fixed Income Market and the CSD in public and corporate bonds, and other money market instruments would be settled on a ‘Transaction date plus two business days’ (T+2) rolling settlement cycle for both securities and funds.

It explained in a statement copied to the Daily Graphic that the change in settlement cycle followed an approval by the Securities and Exchange Commission on August 27, 2015.

Following the approval by the capital market regulator, the CSD consulted with the Bank of Ghana and the Ghana Stock Exchange and arrived at the new cycle.

“Consequently, rule 65 of the CSD Operational Rules is hereby amended as follows: Settlement for transactions in equities shall be on T+3 rolling cycle, settlement for transactions at the primary auction shall be on T+1 cycle and settlement for all secondary trades in debt securities shall be on T+2 rolling cycle,” the statement added.

It, however, explained that “counter-parties to a trade can agree at the time of negotiation to settle earlier on bilateral basis – same day or T+1.

The statement further urged banks, stock brokers, custodian banks and the general public to take note of the new changes and endeavour to comply appropriately.

The CSD is the country’s securities depository, which keeps records of ownership of debt and equity instruments.

It also undertakes clearing and settlement of trades by book entry of equity and debt instruments as well as changes ownership certificates into the depository.