Central Securities Depository Bill goes through second reading

Accra, Dec. 7, GNA - Parliament on Thursday took the Central Securities Depository (CSD) Bill through the second reading, the stage at which the principles of a bill are debated. The object of the Bill is to provide for the establishment of a Central Securities Depository to regulate dealings in securities. The establishment of a Central Securities Depository is a vision embodied in the National Financial Sector Plan (FINSSP) as part of the Government's effort to develop a vibrant bond and secondary market in the country and to ensure a prompt and efficient clearing and settlement system, which reduces the systemic risk inherent in the current system. The Ministry of Finance, the Ghana Stock Exchange and the Securities and Exchange Commission are supporting and involved in the initiation of moves at the Bank of Ghana to establish a Central Securities Depository in Ghana.

Nii Adu Daku Mate, Chairman of the Finance of Committee of Parliament, presenting the Report observed that while Government securities were currently issued and traded in boot entry or electronic form, corporate securities are required by the Companies Code to be issued and traded in certificated form. The Report said the current system posed challenges to both investors and issuers, as it was costly to print certificates after initial public offers.

It stated that; "meanwhile certificates must be cancelled and new ones issued every time securities are traded leading to delays in clearing and settlement. "Certificates also get lost sometimes and reprinting is costly for issuers whilst these certificates can also be forged. Clearing and settlements of trades is manual and, therefore, exposed a settlement risk ...ownership of certificates could change when payment had not been received or cleared."

According to the Report the bill, which sought to provide admittance, eventual dematerialisation and dealings in securities deposited, would also facilitate effective securities trading and trade settlements and also make for easier monitoring of transactions. 7 Dec. 06