The Standard Chartered Bank (SCB) Botswana this week announced its partnership with the newly established Central Securities Depository (CSD) Company where this bank is selected to be the settlement bank for the Depository.
SCB Wholesale Banking has offered the CSD a structured Transaction Banking solution which is going to ensure the timely and efficient settlement of shares. The bank’s award-winning Straight2Bank product is the channel through which the solution is expected to be delivered as it has been carefully aligned to suit the specific requirements of the CSD.
According to a press statement from the bank, this new system is entirely electronic, and holds securities, transfers them, ensures their safekeeping and maintains an updated record of shares held by clients all in paperless format. The release said the accounts on the CDF will be opened for clients by brokers or custodians.
Though custodian banks can open accounts for their clients, the release stressed that they may not trade on the exchange. “Private individuals cannot be direct clients of the CSD, and must go through their brokers or custodian banks,” said the release.
Clients are expected to issue buy or sell instructions to their brokers who will execute the trades on the CSD. The settlement partners, who are the commercial banks where brokers’ accounts are held, must be funds to the settlement bank, SCB.
Hiran Mendis, Chief Executive Offers (CEO) of the Botswana Stock Exchange (BSE) stated that they are very delighted with this exciting development which will benefit investors. According to Mendis, the electronic nature of CSD minimizes the risks associated with physical share certificates, such as the potential for forgeries, delays in receipt of one’s share certificates, such as thefts. “Further, any changes of address and other particulars are automatically updated for all companies with which investors hold securities, eliminating the need to correspond with each of them separately, he said.
Mendis said the capital market in Botswana is like a rough diamond, which means has great potential; therefore, their strategy is to use CSD to unlock this potential.
According to the Head of Origination and Client Coverage, and co-Head of Wholesale Bank, Seseti Mogami, SCB offers a plethora of solutions across the board and prides itself in providing electronic Transaction Banking to its clients through its Wholesale Bank business unit. With the advent of the CSD, and electronic settlement of all transactions, Mogami said investor clients will benefit immensely.
“This new development and partnership represents a safe and convenient way to transact on the stock exchange, with the immediate transfer of shares once funds are cleared. SCB is very proud to be able to contribute to the way forward for the Botswana stock market,” she said.
The CEO of SCB, David Cutting, pointed out that SCB has a responsibility to contribute to the sustainable economic development of Botswana and is proud to be able to provide this sophisticated Transaction Banking solution to the Botswana capital market. “Straight2Bank is a cutting edge system that is proven and successful worldwide, and has been carefully structured to meet the needs of the CSD. We believe the BSE will be able, thanks in part to the creative solutions provided by SCB, to deliver on their strategy to make the stock market available to broader spectrum of investors,” he concluded.
