The Central Securities Clearing System (CSCS) was incorporated on July 29, 1992 as a subsidiary of The Nigerian Stock Exchange.
It was commissioned on April, 1997 and commenced operations on April 14, 1997.
It is a limited liability company which was incorporated by the Corporate Affairs Commission.
It was licensed by the Securities and Exchange Commission as an Agent for Central Depository, Clearing and Settlement of transactions in the stock market.
It operates a computerized depository, clearing settlement and delivery system for transactions in shares listed on The Nigerian Stock Exchange.
CSCS facilitates the delivery (transfer of shares from seller to buyer) and settlement (payment of bought shares) of securities transacted on the floors of The Nigerian Stock Exchange. It enables stocks to be processed in an electronic book-entry form thereby substantially reducing the period it takes a transaction to commence and end.
Functions
- Central depository for share certificates of companies quoted on The Nigerian Stock Exchange.
- Sub-registry for all quoted securities (in conjunction with registrars of quoted companies)
- Issuer of central securities identification numbers to shareholders; and
- Custodian (in conjunction with custodian member(s) for local and foreign instruments.
Delivery And Settlement Process Prior To CSCS
- In most cases, 3 months - 12 months to receive share certificates
- Cancellation and frequent issuance and re-issuance of certificates when sales occur.
- Constant signature verification
- Capital gains not exploited
- Some Dealing members sold what they did not have
- Numerous complaints on failed transactions
- Loss of certificates
- Risk was very high - undue delay, manually operated, manipulations due to long transaction cycle, minimal transparency, therefore generally lack of trust in the system
These problems were worldwide and needed solution, hence the need for a depository (CSCS PLC)