In anticipation of the introduction of more capital market products to Ghana’s markets, and one single platform for trading on the money market, the Central Securities Depository (CSD) Limited is currently upgrading the Depository System of the CSD.
The CSD’s upgrade will be completed by the end of November 2015.
The Go-Live involves the migration of all accounts for both debt and equity onto the new platform and the interface of the new system with the ATS of the Ghana Stock Exchange and the RTGS of Bank of Ghana.
When the upgrade is completed, the Go-Live is scheduled for Monday January 4, 2016.
The new platform deploys the modern depository architecture developed by Millennium Information Technologies of the London Stock Exchange Group.
The main driver for the upgrade is the need to install a common platform to maintain a single account for each investor for all asset classes following the merger of the GSD (equity) and the CSD (Debt).
The other overriding factor is the need for a more modern state of the art platform that will meet the needs of a growing market.
Also, there is the requirement for a platform that would facilitate the introduction of more products onto the Ghana market (such as securities borrowing and lending).
The new platform is a Generation 7 Product Launched by MIT in 2013. It is web-based and can interface to all stakeholders that ensure fast and secure transaction processing for registry, depository and clearing and settlement functions, enhanced flexibility throughout the system with parameterized functionalities and provides real time integration with trading systems and settlement banks.
Its collateral management capabilities accepts cash and physical collateral, and facilitates exposure calculations to maintain available trading limit that are communicated to the trading system every trading day and it facilitates the full life cycle of various corporate actions.
The new system clearing and settlement function supports trade reporting, exposure management, failure management and settlement.
It also supports the various BIS settlement models, DVP I, DVP II and DVP III. Its failure management supports Stock Lending and Borrowing and Repo.
Expected Changes in the CSD System resulting from the Installation of the New Platform will see all existing ISINs maintained in the new system.
However, new securities that will be created after Go-Live will follow a new ISIN structure.
New securities accounts will be automatically generated for existing equity account holders.
The new accounts will follow the structure of accounts in the current debt system e.g. MEMBER CODE-CLIENT ID-ACCOUNT TYPE (BOG-P-0000000001234-LI-0).
However, existing equity account holders who were set up using the same ID as that in the debt system will have their equity holdings migrated into their existing debt account; hence no new account will be created.
Settlement of all transactions will be effected through the central bank, Bank of Ghana as the Settlement Bank.
Settlement will be done in BIS model II (cash net, securities gross) through the SWIFT network interface.
All Depository Participants (DPs) that cannot maintain account with the GIS of Bank of Ghana will be required to appoint a universal bank to act as Settlement Partner and settle on its behalf in central bank funds.
Existing arrangements with Ecobank as settlement bank will cease with the implementation of the new system. Trades done by brokers for custodian clients will settle directly on the custodian clients’ accounts.
No longer will custodian clients’ securities be moved to trading accounts with brokers prior to trading.
Custodian banks will confirm (negative affirmation) transactions done for their clients by T+1.
Transactions that have not been rejected by Custodian banks by T+1 will be deemed to have been accepted and will be settled by the custodian bank.
In preparation for Go-Live on January 4, 2016 and the cut-off date of mid-night of Thursday December 31, 2015, DPs should ensure that the following activities are undertaken:
i.Non-bank DPs (brokers/custodians) should appoint settlement partners (universal banks) that will settle their transactions on their behalf. Copies of Settlement Partner Agreements should be provided to the CSD prior to Go-Live.
ii.CSD will make available new accounts numbers created for existing equity accounts holders to brokers and custodian banks by 6 p.m. on Friday January 1, 2016. These new accounts should be made available to account holders before Go-Live date on January 4, 2016. The old account numbers for equity cannot be utilized for transactions from January 4, 2016.
iii.Custodian banks should ensure that they undertake daily reconciliation on their trading accounts with brokers prior to the cut-off date of December 31, 2015.
Between 3 pm and 5 pm on Thursday December 31, 2015 all custodian banks should undertake a final reconciliation on their trading accounts with brokers.
Between 5 pm and 8 pm on Thursday December 31, 2015 brokers should return all unutilized balances on trading accounts with them to the respective custodians. Custodian banks will be authorised to pull all unutilized balances still outstanding in their trading accounts with brokers after 8 pm on Thursday December 31, 2015.
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Credit: Central Securities Depository