Given the current reforms and competition among global exchanges in the global financial markets, management of the Nigerian Exchange Limited (NGX) on Thursday said it is working assiduously with the Central Securities Clearing System (CSCS) Plc, and other stakeholders to reduce the settlement cycle from T+3 to T+1 over the next few years.
The Exchange said it will also continue to seek and explore the use of advanced technological tools such as Straight Through Processing (STP) of equity transactions to enhance transparency in the Nigerian capital market (NCM).
Speaking at the virtual NGX Retail Workshop themed: STP of Equity Transactions, organized in collaboration with CSCS Plc and United Capital in Lagos, Divisional Head, Capital Markets, at the NGX, Jude Chiemeka, said the equities market is constantly evolving.
This, he explained, it is imperative that the Exchange keeps up with the latest trends and technologies to ensure it provides investors the best possible service as a platform provider.
STP, he said, is a mechanism that automates the end-to-end processing of transactions of financial instruments and also provides a means of electronically capturing and processing transactions from the point of first deal to final settlement.
Citing examples of how well STP worked in other climes, Chiemeka said that STP which was launched in India last year with a settlement cycle of 15 days, now has a cycle of 2 days, thus putting the India capital market in the elite group of advanced markets of the world while adding that the NGX is working assiduously with the CSCS and other stakeholders to reduce the settlement cycle from T+3 to T+1 over the next few years.
According to him, “this initiative can be achieved with the use of technology such as STP and adopting the STP will help in increase market transparency, avoid costly duplication of work and manual intervention, reduction in risks and errors, faster data capturing, processing and reporting generation, increase the overall market efficiencies and volumes of trade make the market cost effective and provide effective regulation by systematic audit trail.
“In view of this, NGX will continue to explore the use of advanced technological tools such as STPs to ensure that the investing public conduct their transactions in a more efficient and seamless manner,” he stressed.
Offering insights on the benefits of STP, the Regional Head, Business Technology and Digital Innovation at CSCS, Tobe Nnadozie, said that the mechanism will create seamless settlement for investors and help to get real time enterprise Know-Your-Customer (KYC) integration. Nnadozie added that even though the STP might be expensive now, it will become cheaper in the long run.
For Martha Ehizele, Digital Channels and Partnerships lead at United Capital Securities, the STP mechanism will help attract youths, especially those who are not investing, to the capital market.
Contributing, the Head of Investor Service Product Management, Transactional Products and Services at Standard Bank Group, Hari Chaitanya, said the STP is quick and allows investors to have easier access to wide range of products, mitigate risks and reduces cost of operating in the market.