Nigerian Exchange Limited (NGX) has partnered with Central Securities Clearing System (CSCS) Plc and other stakeholders to reduce the settlement cycle from T+3 to T+1 in the Nigerian capital market. The collaboration aims to enhance transparency and efficiency through the use of advanced technological tools, such as Straight Through Processing (STP) of equity transactions. STP automates the end-to-end processing of financial instruments and facilitates seamless settlement for investors.
Nigerian Exchange Limited (NGX) is working closely with the Central Securities Clearing System (CSCS) Plc and other stakeholders to reduce the settlement cycle in the Nigerian capital market. Currently, the settlement cycle stands at T+3, meaning that it takes three business days to complete a trade and settle transactions. However, the goal is to reduce this cycle to T+1 over the next few years.
The partnership between NGX, CSCS, and other stakeholders aims to enhance transparency and efficiency in the Nigerian capital market. One of the key technological tools being explored is Straight Through Processing (STP) of equity transactions. STP automates the entire process of transactions, from the initial deal to the final settlement, making it faster and more efficient.
Jude Chiemeka, the Divisional Head of Capital Markets at NGX, emphasized the importance of keeping up with the latest trends and technologies to provide the best service to investors. He cited the example of India, where the implementation of STP reduced the settlement cycle from 15 days to just 2 days, placing the Indian capital market among the advanced markets of the world.
The benefits of STP are numerous. First, it increases market transparency by eliminating manual processes and reducing the chances of errors. It also enables faster data capturing, processing, and reporting generation. STP makes the market more efficient and cost-effective, while providing effective regulation through systematic audit trails.
Tobe Nnadozie, the Regional Head of Business Technology and Digital Innovation at CSCS, highlighted the seamless settlement and real-time enterprise Know-Your-Customer (KYC) integration as advantages of STP. While the initial implementation of STP may come at a cost, its long-term benefits outweigh the expenses.
Martha Ehizele, the Digital Channels and Partnerships lead at United Capital Securities, noted that STP can attract more youths to the capital market. By offering a seamless and efficient transaction process, it enhances accessibility and encourages participation.
Hari Chaitanya, the Head of Investor Service Product Management at Standard Bank Group, emphasized that STP is quick and provides easier access to a wide range of products. It also mitigates risks and reduces the cost of operating in the market, making it a win-win for investors.
With the collaboration between NGX, CSCS, and other stakeholders, the Nigerian capital market is set to undergo significant reforms. The reduction of the settlement cycle from T+3 to T+1 will not only enhance transparency but also improve overall market efficiency. Through the adoption of advanced technological tools like STP, the investing public can conduct their transactions more efficiently and seamlessly.
Source of content: OOO News 2023-07-10 News
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