| Stock innovation: Soon,
the CSCS will overtake share certificates
By OBIDIKE JERRY Email:pajerry@yahoo.com
Saturday, May
3, 2008
 |
•Ogbebor
Photo: Sun News Publishing |
| |
Mr. B. A. Ogbebor, the Managing Director of Foresight Securities
and Investments Limited, is upbeat about the rising benefits
and returns of the stock market to investors and the economy.
But if that makes him happy as a player in the field, you
the investor and stakeholder would have something better to
cheer for.
Remember how the issuance of your share certificate has been
a nightmare to your speed and comfort in stock investment.
This player in the sector has great news that the era of share
certificate endless wait will soon be over.
There is already an alternative in the offing by the Nigeria
Stock Exchenge and the Securities Commission.
That alternative comes in the form of registration of your
shares in a direct elctronic process in a CSCS account. With
this innovation which will soon take roots in the sector,
you need not have sleepless nights over how you get your share
cerificate after buying shares.
CSCS in place of share certificate
The processes and procedures of making the system work better
are still evolving. Technology is being introduced. Thanks
to the Nigeria Stock Exchange and thanks to Securities and
Exchange Commission. They are encouraging innovation on daily
basis. So, what we call e-application is gradually taking
over. In other words, once the application is made, allotment
process is concluded, you have your allotment immediately.
Instead of issuing share certificate, your account in CSCS
would directly and immediately be credited. At the time you
are filling the form, you also get your CSCS number? That
appears in in the application so that whatever proportion
(of the shares) given to you will be credited to the account
directly. In other words, you will not touch or see or need
any share certificate any longer. That process is on now and
gradually before next two or three years it will be the order.
That will actually solve the delay in the delivery system
– which verification and others would engender.
The CSCS advantage
With the advent of CSCS, Central Security Clearing System,
which is a subsidiary of the Nigerian Stock Exchange, the
stock market has become very active and alive. You buy shares
today, if you want to sell it next week, it is possible. You
buy shares today, in four days you see that there is appreciation
in the price over the last three days and you want to take
advantage of that price appreciation, it is possible. Whereas
in the old delivery system, if by the time you have something
that you will need money for and you have decide to use the
share certificate to sell part of your share holding, you
have to bring out your share certificate, take it to a stock
brokerage firm, discuss with the stock broker, the stock broker
will give you some documents to complete then you bundle everything
straight to the Registrar. Meanwhile, what you need the money
for is urgent but the procedure demands you have to do the
verification before you can sell.
Before you complete the verification it may be three months.
So, the advent of CSCS has overtaken all those. CSCS will
encourage you to dematerialize your share certificate at your
own convenience when you are not under pressure when the need
for urgent cash has not arisen. Take all your stock certificates,
go and discus with your stock broker. The stock broker will
look at everything. There will be some of them that are not
doing well, your stock broker will advice you. Let’s
do away with some of them – let’s sell them. You
dematerialize everything under the comfort of the office of
your stock broker, then put everything in your account in
CSCS and once they are there in your account if you give the
instruction to your stock broker this morning that you want
the so and so shares to be sold that same morning your stock
broker can sell it and payment can be effected within the
first three days.
CSCS, Public Offer and capital appreciation
The experience you have just related has to do with public
offer. Some will still use it wrongly. For instance, the case
of a particular new generation bank that recently came to
the market the third time in three years. People still referred
to the public offer which it made as IPO. That is not correct.
It is public offer.
The one (initial) they did in 2004 was the initial public
offer. Again, the delay was becoming too unbearable. The reason
has been that under the rules of the Nigeria Stock Exchange,
the Security and Exchange Commission, without the intervention
of Central Bank of Nigeria (CBN), it will take nothing more
than two months for the share certificate to be out. But a
time was when CBN while working in collaboration with EFCC
to fight money laundering syndrome had to retard the speed
of the process.
So, when there is public offer, when many people would have
applied for share certificate, the CBN would direct the Bank
or the issuing house to send all the applications to it for
verification. If they see a bulk purchase of about N50 million,
for instance, they would want to inquire who the owner is?
How did he get the money? So, it is the process of this verification
that has actually been responsible for the long delay. Sometimes
in 12 months or nine months the certificate wont still be
out. But in the last couple of months, the CBN took a decision
that the verification, though will still continue, but not
before allotment. Now, the situation would be, application
will open, people will apply, the allotment process will continue,
they would now allot. But CBN will select some of which they
will eventually ask questions on.
Attitude to stock business
Many people are becoming aware that they can stay at home
and their money will be working for them. That is exactly
what the capital market represents. Find a job for your money
and it would work satisfactorily for you. Many Nigerians are
no longer satisfied in money market operations, that is, going
to open a bank account by placing a fixed deposit.
Capital market operation is such that if you invest N50,000
and you rely on the right advice, the professionalism of an
expert in the capital market you would discover that in two
months you may double that money. And it is a legitimate business.
Study the stock market, select some of the stocks, spread
the money and use it to buy different stocks, before two,
three weeks you see that the prices of those stocks are appreciating.
The prices appreciate because many people now do not rely
on waiting for dividends at the end of the year.
But as the knowledge of stock business is spreading and many
people are coming into it, the disadvantages also trail the
development. Many fraudsters study the market also. So, they
infiltrate the market and before you know it they spread their
tentacles and that is why we have to be grateful to the regulatory
body of the Nigerian Stock Market. |
