[2008-05-23]  CSD goes live today
The Botswana Stock Exchange (BSE) will today take a step closer to improving liquidity as the Central Securities Depository (CSD) system goes live.

The first companies to be implemented are FNBB, Turnstar and Sefalana.

The Manager of the new system, Masego Pheto, says other companies will be introduced into the system in phases and that if things go according to plan, all companies listed on the BSE be in the system before the end of June.

The official opening of the CSD will be on May 29, 2008. Pheto says the choice of the first three companies was based on the most liquid stocks on the bourse, hence FNBB and Turnstar. While Sefalana may not be among the most liquid stocks, it was included because other companies like Barclays and Discovery Metals have not yet completed the required depository transfer.

"We chose the most liquid stocks so that we test our system," Pheto explains. "It will also depend on how fast stockbrokers and custodian banks cope with open accounts for investors." The CSD system was installed with the assistance of the Government at the cost of P5 million.

It will help BSE increase liquidity, which has been a major challenge on capital markets. The CSD is basically a computer system that facilitates the holding of securities in electronic accounts in contrast to paper certificates that BSE has been using.

Stock exchanges around the world are introducing the electronic system to replace the physical handling of shares. The CSD will perform several functions, including the processing of certificates, deposits, withdrawals, transfer of securities between accounts and record trading.

The system will help to attract more foreign investors since the settlement and clearing standards used will be internationally recognised. With the manual BSE system, there is an exchange of cheques and certificates, which is risky and inefficient. The cheques could be misplaced, stolen or lost, affecting trading adversely. The system is also prone to fraud, insider trading and transfer cancellations.

Brokerages that will participate in the CSD include Motswedi Securities, Capital Securities and Stockbrokers Botswana.

Participants will be expected to open accounts and keep securities for their clients in the CSD.

Under the current system, when people buy shares, they have to approach a stockbroker and wait for some days before they get a share certificate from the transfer secretaries.


Source: © MMEGI 2002 - 2008