SEC: Direct Cash Settlement to be Mandatory from September 1


It will become mandatory for all investors in the nation’s capital market to key into the Direct Cash Settlement (DCS) initiative from September 1, 2017, the Director General of Securities and Exchange Commission (SEC), Mr. Mounir Gwarzo said wednesday.

DCS is an initiative that allows proceeds of shares sold to settle directly into an investor’s account as against the system whereby the proceeds go to the   broker’s account before passing it to the investor. The   DCS, which commenced last year, has been voluntary. However, speaking at post-Capital Market Committee(CMC) meeting press conference in Lagos, Gwarzo said the CMC has agreed that from September 1, 2017the DCS will become mandatory for every investor.

“The DCS initially it was voluntary but when we saw recent events in the capital market, the CMC came together and said the best way to do it is to make it mandatory. Everybody will be inside the net.  It is only if you do not want to key into it, you can then opt out. The CMC set up a committee, which did a very robust job and we have resolved that from September 1, 2017, DSC will mandatory for every investor.  Meaning that every investor in the market   will key into the DCS unless the investor decide to opt out,” he said.

According to him, the DCS has not reduced level of complaints on diversion of investors’ money, but has also brought speed and transparency to the market.

He added that the decision to stop issuance of dividend warrants from July 1, 2017 remains unchanged, urging investors who are yet to embrace the electronic (e) dividend initiative to do so.

Gwarzo disclosed that so far, about 2.2 million investors have given mandates for e-dividends, noting however, “our intention is for the 7.7 million investors to mandate their accounts and we will continue to work towards achieving that. But as stated before, the issuance of dividend warrants will end June 30, 2017.” 

Speaking on dematerialisation, he said the shares  in the market have been 100 per cent dematerialised.   Gwarzo also disclosed that   there will be a new   transaction fee structure for the SEC, NSE, issuing houses and receiving agents as presented by the Commission to be adopted for one year.

The DG said in all, despite the negative market indicators, the capital market community recorded some level of success on some initiatives embarked upon in 2016.