SEC worries over investors’ apathy to direct settlement

The acting DirectorGeneral of the Securities and Exchange Commission (SEC), Mary Uduk, has lamented lack of interest by investors in registering for the Direct Cash Settlement (DCS) introduced by SEC.

The acting DG, who disclosed this while speaking at the post-Capital Market Committee (CMC) first quarter media briefing, noted that only 1,191 investors have subscribed to the initiative out of 5.1 million accounts domiciled in the Central Securities System (CSCS).

The Direct Cash Settlement initiative which commenced on January 4, 2016, is a process where cash proceeds from trades executed by brokers on the exchange settle directly into investors’ bank accounts.

This is in contrast to the current practice where proceeds from the sale of securities are paid directly into the stockbroker’s accounts and stockbrokers deduct transaction fees and remit the balance to the client’s account.

Uduk, Clearing called for collaborative effort among all stakeholders in the market to achieve the objective of the DCS, noting that only 15 out of 18 settlement banks have contributed to the DCS initiative.

She said: “Considering the fact that DCS will instill confidence in the market, there is need for all parties involved in the process to work harder to achieve a 100 percent migration.”

Uduk further noted that a total of 2.5 million accounts, translating into 466,000 unique investors’ accounts have keyed into the e-dividend registration initiative.