The Central Securities Clearing System has said it is ready to handle securities lending and borrowing for custodians.
In line with its preparedness, the CSCS said it had on Tuesday presented securities lending and borrowing and post-trade allocation process flows to capital market operators with the view to enhancing market liquidity.
A statement by the CSCS on Wednesday quoted its General Manager, Operations, Mr. Joseph Mekiliuwa, as saying that the SLB arrangement would enable market participants to lend securities from a registered securities lending agent.
Mekiliuwa, who said the arrangement was open to the custodian banks and their brokers, explained that it would aid market participants to go short by selling securities that they did not have and lending from the SLA to cover their short position before settlement date.
He added that the post-trade allocation arrangement would enable stockbroking firms to buy securities en-bloc into a pool account on behalf of a custodian firm and on the same day re-allocate the same securities to the beneficial owner’s accounts domiciled with the custodian firms according to the beneficial owner’s mandate.
He said, “Foreign institutions that are willing to participate in the SLB are required to appoint a local SLA in Nigeria, who will act on their behalf. It is the responsibilities of concerned parties to ensure that the securities lending contracts agreements are in compliance with the best practice and applicable laws accordingly.
“However, this document covers the account holding structure, securities transfers or detachments and other related processes to facilitate timely delivery of securities.”
The CSCS, however, stressed that it would not allow lenders such as custodians or dealing firms lend shares on behalf of the owner of the shares either from a segregated or omnibus account without the securities lending authorisation agreement.
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