Capital Market: Shares Certification Goes Digital

By Ikenga Chronicles December 23, 2016
The Nigerian capital market has successfully switched to electronic share certification, known as dematerialisation after initiating the process a decade ago.
The General Manager, Operations, Central Securities Clearing System Plc, Joe Mekiliuwa who disclosed this, said  “We are now 100 per cent dematerialised, and this was achievable following the initiative by the Securities and Exchange Commission, as well as efforts of the of market community”
Dematerialisation is the conversion of physical share certificates of investors in the capital market to electronic forms to aid seamless trading and ‎is targeted at boosting liquidity in the capital market.
Mekiliuwa disclosed that  about 8.5 million accounts had been dematerialised in addition to the 7.5 million that had been done much earlier, adding that all share certificates existing in the country’s capital market system had been converted to electronic forms.
Mekiliuwa added, “Even accounts that are yet to be activated by investors are covered in this arrangement. This means that investors without accounts in stockbroking firms now have the share certificates with them dematerialised, though they are holding physical certificates.
 “The physical share certificates are now useless, because the electronic records of the certificates with the registrars have been turned into the CSCS account.”
“Investors without accounts at all should go to brokers and fill a form for full dematerialisation. Such records will be sent to the registrars, who will then inform us to move the shares to the accounts created.”
He said stated that with the share certificates now in the system, trading on them would be easier than it was.
Recall that SEC gave capital market stakeholders a mandate to achieve 100 per cent dematerialisation, and the stakeholders led by the CSCS had earlier moved to achieve 100 per cent dematerialisation of the share certificates by the end of the third quarter of this year.
At the beginning of the third quarter, over 98.4 per cent of the shares certificates of quoted companies on the Nigerian Stock Exchange had been dematerialised and in the CSCS depository.
This became necessary in order to solve the problems of delay in issuance, verification, loss, theft, and forgeries, among others.
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