Presented by Mr. Adeolu Bajomo Executive Director, Nigerian Stock Exchange Market Operations and Technology For Capital Markets Committee November, 2015
Agenda • Introduction: Three Foundations for the Retail Market 1 • Direct Cash Settlement (DCS) 2 • DCM – Critical Process Flows and Next Steps 3 • Identity Management in the Capital Market 4 • Smart Trading 5 • Dematerialisation 6 • Post Trade Allocation 7 Increasing Retail Participation in the Capital Market November 2015 2 CONFIDENTIAL
Objectives and how to proceed Smart 1 2 3 Full Direct Cash Trading Dematerialization Settlement • It is recommended that the • While full dematerialization is • Running in parallel will be first phase of the project being implemented, the Direct the full roll-out of Smart would be Full Cash Settlement initiative Trading , which would in turn Dematerialization. would be simultaneously lean on an updated and implemented, leveraging on reconciled investor database • The Direct Cash Settlement the progress made from to bolster trading velocity. initiative will require complete putting into operation the • Direct implication of this documentation and dematerialization processes. reconciliation of investor initiative would be increased • It is envisioned that Direct Cash information, holdings, contact investor control, which in details (with the CSCS and Settlement should be optional turn would translate to respective Registrars), and to investors to enable them to increased investor bank account details; hence choose between direct and confidence, improved levels 3 full dematerialization is non-direct settlement. of financial inclusion and required initially. surge in trading volumes. Increasing Retail Participation in the Capital Market November 2015 3 CONFIDENTIAL
Progress Report DIRECT CASH SETTLEMENT . • Enhances investor confidence, improves transparency and encourages more participation in the market • Direct Cash Settlement Process flow • Use of BVN as solution to Investor Identification problem • Migration Process • Challenges and Next Steps 4 Increasing Retail Participation in the Capital Market November 2015 4 CONFIDENTIAL
Direct Cash Settlement - Critical Process Flow • The process flow diagram below depicts the structure of Direct Cash Settlement. CSCS Investor Broker (or Alert is Purchases At t+3 advises Beneficial moves Investor via sent to Process securities banks / owner payment Tradesmart both buyer move to NIBSS on at bank to acct ) executes and seller investor cash level with mandate at of account settlement Broker the NSE securities details On t+3 payment is made directly Investor into seller account and Investor 1.3% Alert is advises commission to Broker sent to Broker (or Broker executes both buyer CSCS via Sale mandate at and seller Processes Tradesmart Mandates the NSE of ) to sell Process securities On t+3 securities securities leave seller acct to buyer acct Increasing Retail Participation in the Capital Market November 2015 5 CONFIDENTIAL
Next Steps Conversations ongoing with Dealing Firm Representatives Finalise and CSCS to ensure that E2E process can be fully Process incorporated into Broker flows for processing orders from Flow with investors. This will detail Bank Account Details Caputure ASHON and Commission Payment Once Live date is agreed (aimed at 4th January 2015), Commence the market participants should commence an Investor intensive campaign Awareness Campaign Process of confirming/verifying a customer by matching his/her biometric feature with the BVN Integrate BVN Into the against what has been captured in the database. Process Critical building block Work with brokers and registrars to encourgae Process of confirming/verifying a customer by Go Live matching his/her biometric feature with the BVN against what has been captured in the database. Increasing Retail Participation in the Capital Market November 2015 6 CONFIDENTIAL
Progress Report INVESTOR IDENTITY MANAGEMENT . Solving the Identity Management Problem of the Nigerian Capital Market Facilitating Financial Inclusion Simplify onboarding of Investors Improving Investor Confidence 7 Increasing Retail Participation in the Capital Market April 2015 7 CONFIDENTIAL
Solving the Identity Management Problem Using BVN Dematerialization Investor Identity Management Problem Bank Verification Number (BVN) 8 Increasing Retail Participation in the Capital Market November 2015 8 CONFIDENTIAL
BVN Offerings – Verification and Validation Process of confirming/verifying a customer by matching his/her biometric feature with the BVN against what has been captured in the database. Verification Upon successful verification, the image and demographic information of the customer is BVN displayed. Offerings Process of confirming/verifying a customer by matching his/her BVN number with the BVN database and comnfirming basic details such as name, DOB and Bank Account details against what Validation was captured in the BVN database. Increasing Retail Participation in the Capital Market November 2015 9 CONFIDENTIAL
BVN Verification – Options from NIBSS Preferred Option 1: Option 2: • Brokerage community to connect • Brokerage community to connect to a central server hosted by NIBSS. to a central server hosted by the CSCS. • Implications: • CSCS server to connect to NIBSS Secure link between each via a secure link - 21 st Century, broker and NIBSS – 21 st IPNX • Implication: Century, while IPNX would be Cost of Central Server at the for redundancy. CSCS – $400,000 (estimate) Device cost – procurement of Access fee – N4 million for scanners at broker offices. the CSCS central server Access fee per Broker – N4 (one-off payment) million (one-off payment) Yearly Subscription by the Yearly Subscription by each CSCS Each brokerage firm, to brokerage firm connect to the central server at the CSCS through existing link. Increasing Retail Participation in the Capital Market November 2015 10 CONFIDENTIAL
BVN Verification Process (from NIBSS) VERIFICATION PROCESS Start CUSTOMER Present BVN and Fingerprint(s) or Face OFFICER @ BRANCH NO Finish VERIFICATION Verify Customer with the BVN and The customers Image and Biometric details demographic information is provided displayed on the screen Verification Does BVN BANK HQ SERVER Verification Does Fingerprint NO YES Request is exist in Bank YES 1:1 or Face match? received HQ? YES NO Verification request is sent to the Central server CENTRAL SERVER Verification Does BVN Verification Does Fingerprint Request is exist in YES 1:1 or Face match? received Center? NO Customer presents BVN and fingerprint(s) or face and is verified using the Fingerprint Scanner (ZF1) or Webcam Customer’s fingerprint/face is automatically compared with the biometric details stored for the customer on the Bank HQ server. Where the BVN of the customer does not exist on the Bank HQ server, the verification request is sent to the Central server to compare the biometric information provided by the customer and what is stored in the central database. Increasing Retail Participation in the Capital Market 11 November 2015 CONFIDENTIAL
BVN Verification – Detailed Cost (from NIBSS) Cost Category Cost where HQ Cost where HQ Cost where HQ Cost where HQ is not NIBSS is not NIBSS is NIBSS is NIBSS ($) (N) ($) (N) Central Cost *3,720.93 800,000.00 - - Link from Branch to HQ (21st Century/ IPNX- 2MBPS) per annum Required Infrastructure (Capex) 247,935.96 53,306,231.40 - - 66,544.85 Annual Maintenance (Opex) 14,307,142,75 - - Access Fee (One-off) - - 24,262.09 5,216,349.35 - - 21,934.74 4,715,968.40 Annual Subscription fee 318,201.74 68,413,374.15 46,196.83 9,932,317.75 Total Branch Cost 750.65 161,389.75 750.65 161,389.75 Branch License (Cost per branch) 365.00 78,475.00 365.00 78,475.00 Fingerprint Verification Scanner (1) 355.00 76,325.00 355.00 76,325.00 Webcam (1) - - *3,720.93 800,000.00 # Link from Branch to HQ (21st Century/ IPNX- 2MBPS) per annum Total 1470.65 316,189.75 5,191.58 1,116,189.75 319,672.39 68,729,563.90 Grand Total 51,388.41 11,048,507.50 • *Price depends on bandwidth, location of branch, type of link (e.g. Fibre, internet) etc. • Exchange rate @ $215 • Where HQ is NIBSS, a transaction fee of N20 will be charged for each successful verification. • # The Stockbrokers all have an existing network to CSCS in the event that HQ is not NIBSS, so cost is required . Increasing Retail Participation in the Capital Market November 2015 12 CONFIDENTIAL
Recommend
More recommend
