Central Securities Clearing System (CSCS) Plc has been upgraded by Thomas Murray, the global post-trade risk and custody specialists, from A to A+, which denotes a ‘Low’ Overall Risk.
The Overall Assessment of ‘A+’ reflects a weighted average of seven risk components. The assessment for Asset Servicing Risk has been omitted from the Overall Risk assessment since CSCS takes no active part in the entitlement calculation or processing of corporate actions in the market.
The outlook for the CSCS risk assessment is ‘positive’ owing to the fact that there are numerous pending developments scheduled for implementation within the short to medium term. Official time schedules have not been announced in all cases, but it is anticipated that, upon implementation, these developments have the potential to improve the risk assessment of CSCS.
According to the report, one of such developments include the organisation becoming a direct member of the Central Bank of Nigeria (CBN) RTGS system, ensuring that DVP settlement would be realised for both on-exchange and OTC transactions by linking the securities leg and cash leg of settlement. CBN approval would be required prior to establishing a link meaning that the timeframe for this would be largely dependent on the CBN.
Commenting on the upgrade, Mr. Haruna Jalo-Waziri, Managing Director/Chief Executive Officer of CSCS said: “The upgrade from A to A+ is a significant milestone towards being a globally respected and leading central securities depository in Africa. The key upgraded areas further indicate that we have made notable improvements in managing our market’s overall risks as we increasingly continue to align ourselves with global best practices. I am extremely
proud of the collective efforts made over the years by our committed staff to enable us to
make such progress.”
In the same vein, Mr. Jim Micklethwaite, Director, Head of Operations for Thomas Murray said: “Thomas Murray is delighted to announce an upgrade to the overall risk assessment of CSCS. The upgrade across several areas recognises the significant and widespread improvements to processes and controls put in place over the last few years by CSCS, particularly due to the upgraded functionality within its new core system, TCS BaNCS. We will
monitor CSCS’ improvements as they continue to adopt international best practices.”
The Central Securities Depository (CSD) risk assessment reviews and assesses the risk exposures for investors associated with the processes the CSD has in place to facilitate the safekeeping and the clearing and settlement of securities, where applicable. It assesses eight key risks (assessment components).
The methodology considers the capabilities of the depository and the quality and effectiveness of its operational infrastructure. It also assesses the depository’s willingness and ability to protect its participants or clients from losses.
As part of the assessment, the scope and quality of the depository’s services is assessed. The assessments are on a consistent global scale, using the familiar AAA to C grading scale. Once the grading is assigned there is an ongoing surveillance process to monitor the depository.
Thomas Murray maintains proprietary assessments of over 140 CSDs globally as part of the Thomas Murray Depository Risk Assessment services.
About CSCS Plc.
The Central Securities Clearing System Plc (CSCS Plc) was incorporated in 1992 as a Financial Market Infrastructure (FMI) for the Nigerian Capital Market. It was commissioned in April, 1997, and started operations in the same month. In May, 2012, CSCS became a Public Liability Company (Plc) by a special resolution.
CSCS is licensed by the Securities and Exchange Commission (SEC) as a central depository, clearing,
and settlement agency for transactions in the Nigerian Capital Market. It operates a computerized
system for transactions in securities in the market.
CSCS facilitates the delivery and settlement of securities transactions consummated on approved
Nigerian Exchanges. It enables securities to be processed in electronic book-entry form, speeding
up the transaction period. It also provides ancillary services such as the Electronic Document
Management Services, collateral management amongst others.
The company has made visible strides in the Nigerian Capital Market and continues to respond to
the needs of the securities and commodities market to enhance transparency and swift
settlement of transactions.
About Thomas Murray
Thomas Murray is a specialist custody risk assessment, risk management and research firm
specialising in the global securities services industry. Thomas Murray was established in 1994.
The Company monitors and analyses over 320 custodians globally and evaluates the risk of
over 140 CSDs, 30 CCPs and over 90 capital market infrastructures. The company has a strong
position as a provider of public and private risk assessments on global custodians, domestic
custodian banks and capital market infrastructures.