INTRODUCTION
The Central Securities Depository (CSD) is a computer-based data recording system that records the holdings of all securities (Government Securities, Equities and Corporate Bonds etc), in electronic form. The CSD functions in the form of a ‘’bank’’ for securities where all transactions (debit and/or credit of securities) of investors are made. The CSD will, therefore, be linked to participating institutions (depository participants) that trade in securities.
With the introduction of the CSD, physical certificates of an investor will be converted to an equivalent number of securities in electronic form and credited into the investor’s account with his/her depository participant.
OBJECTIVES OF THE CSD
To provide a central depository in Ghana where records of beneficial ownership of debt and equity instruments will be kept in electronic form.
To undertake clearing and settlement by book entry of equity and debt instruments.
To provide for the placement of physical certificates into the depository and the complete changeover from physical certificates representing ownership to the book entry format.
ADVANTAGES OF THE CSD
Under the CSD system, there will be total elimination of risks such as the loss, mutilation and theft of certificates associated with holding and trading of paper-based securities of investors.
The new system will facilitate Delivery Vs Payment (DVP).
There will be a reduction in the errors and delays associated with paper-based manual processing thus bringing in efficiency in the clearing and settlement system.
STAKEHOLDERS OF THE CSD
CSD as an organisation will provide a centralised depository, as well as clearing and settlement services to the market
Participants will act as the interface between investors and the CSD
Issuers and their registrars will confirm the authenticity of certificates and distribute entitlements
Investors will be the ultimate beneficiaries of the services provided by the CSD.
PARTICIPANTS OF THE CSD
Participants are organisations appointed by the CSD to act as its agents. There are two main categories of participants. They are:
a. Primary Dealers
b. Licensed Brokers
Primary Dealers are Banks, Discount Houses and Brokerage firms licensed by the Bank of Ghana to take part in the Primary Auction of Government of Ghana and Bank of Ghana Securities.
Licensed brokers are firms licensed by the Ghana Stock Exchange to trade in shares of listed companies and corporate debt.
These participants shall be called Depository Participants (DPs)
THE ROLE OF A DEPOSITORY PARTICIPANT
Depository Participants play the role of intermediaries between the CSD and the investing public.
They shall perform the following functions:
- To collect and submit certificates to the CSD for deposit to the accounts of investors;
- To submit requests for withdrawal of certificates;
- To open, maintain and close securities accounts;
- To allocate trades to securities accounts
