Central Securities Depository Bill through consideration stage

Accra, Feb.20, GNA - The Minority National Democratic Congress Members of Parliament on Tuesday suspended their two-week old boycott of parliamentary business and joined their colleagues to take the Central Securities Depository Bill through the consideration stage. The Minority on February 6, boycotted Parliament to protest against the ten-year jail sentence slapped on Mr Dan Abodapki, (NDC-Keta) for causing financial loss to the state.

The Minority returned to the House after several pleas from various quarters, including one from the Presidency and the jailed MP. The Minority MPs joined in moving several amendments to the Central Securities Depositories Bill.

The object of the Bill is to provide for the establishment of a depository to regulate dealings in securities.

According to a report of the Finance Committee, the Bill "provides for Central Securities Depositories to be approved with power to make rules for its members and operators........under the supervision of the Security and Exchange Commission. It also provides for the holding of securities in immobilized or dematerialized form." The establishment of a Central Securities Depository is a vision embodied in the National Financial Sector Plan as part of 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 of the current system. The report said while government securities are 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 current system poses a number of challenges to both investors and issuers........Firstly, it is costly for issuers to print certificates after initial public offers...", the reported said. "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," the report added.

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.