The Head of Databank Brokerage Armah Akotey, in an interview with the B&FT, said the merger of the two depositories is fuelling speedy and easy undertaking of business in Ghana’s securities market.
“With the depository in place, now it is easy to drive credit lending. One main barrier to lending in our part of the world is the issue of collateral, but when you have your securities at the depository it can be used as collateral for credit because the lender can easily confirm how much you have with the depository,” he said.
The Central Securities Depository Ghana Ltd. was established in 2004 to manage the issue, redemption and maintaining records of ownership for securities issued by Government of Ghana, Bank of Ghana and the Ghana COCOBOD. The Ghana Stock Exchange also established GSD to handle equities.
But in January this year after consultation with stakeholders, the two depositories merged, with Bank of Ghana having a stake of 82 percent while 18 percent of CSD is owned by GSE Securities Depository. It now operates completely as a single entity managing both debt and equity securities.
The CSD also operates on an electronic platform, which allows for easy transactions and settlement. This, Mr. Akotey noted, has paved the way for efficient transactions -- especially in the international financial market as foreigners anywhere in the world can buy securities from the Ghana’s securities market.
Mr. Armah explained that investors do not have to entertain any fears regarding the security of their investment because, regardless of whatever happens to banks, their investments will be held at the depository.
“One advantage is that if a bank a goes down today, the investor will not lose their investment because it is the CSD that keeps all securities in the country. It is also relevant because foreigners buy most of our bonds and they can do so in the comfort of their homes.
“The benefits of the CSD are enormous, especially on the international financial market; foreigners can go to CSD for prices of securities in the Ghanaian market -- which is an advantage to us because majority of bonds are bought by foreigners,” he said.
He added that before the automation, certification alone could take up to six months and usually had to go through different offices for validation which was cumbersome and hurting to investors in the securities market.
He said that it was necessary for publicly traded institutions to be able to plough their money from the securities market into their investment with ease, as is done in advanced markets of the world.
“In advanced markets, anything that is publicly traded should be able to facilitate liquidity: that is, you should be able to put your money into your investment (bonds and shares), get your investment back and reinvest into the market and that is facilitated with the CSD. So one reason for bringing on board the CSD is to facilitate liquidity in the financial market,” he said.
Source: http://thebftonline.com/content/csd-merger-energising-securities-market
