Update on Direct Cash Settlement Implementation in Nigerian Capital Market

The update on Direct Cash Settlement (DCS) in the Nigerian Capital Market as of November 2016, by Ade Bajomo, covers progress on DCS account set-up requests to settlement banks, BVN validation by brokers, analysis of rejected DCS account set-up requests, major challenges faced, and recommendations for improvement. Key issues include delays from settlement banks, rejected requests due to documentation errors, and unresponsiveness of some banks. Recommendations include driving market initiatives to raise awareness through various channels.

• Direct Cash Settlement
• Nigerian Capital Market
• Ade Bajomo
• Financial Markets
• Recommendations

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1. Update on Direct Cash Settlement (DCS) Implementation in the Nigerian Capital Market November, 2016 Ade Bajomo

2. Agenda Update on DCS Account Sep-up Requests to Settlement Banks 1 Update on BVN Validation 2 Analysis of Rejected DCS Account Set-up Requests 3 Major Challenges 4 Recommendations 5 Q & A 6 November 2016 2 CONFIDENTIAL

3. Update on DCS Account Set-Up Requests to Sett. Banks DCS Account Set-Up Requests (YTD) 1200 1034 1000 800 615 600 400 238 200 0 Requests Received Accounts Set Up Rejected Requests Number of DCS accounts Set Up, By Sett. Banks(YTD) 235 250 200 136 150 . 100 49 38 28 50 21 15 12 9 6 5 3 2 0 0 0 0 Number of DCS Accounts Set-up by Sett. Banks DCS Responsive Banks: First Bank, GTB, Skye Bank, Stand. Chartered, Zenith , Fidelity, Sterling, Heritage Unresponsive Banks: Access, Keystone, Unity Bank Delayed Response : Diamond Bank, StanbicIBTC , UBA, Union Bank Note: Responsiveness implies 48hours revert to the CSCS 3 CONFIDENTIAL November 2016

4. Update on BVN Validation by Brokers BVN Validation by Brokers on NIBSS Portal (YTD) 900 791 800 762 741 680 700 604 595 600 480 500 442 433 400 336 300 . 200 100 0 Jan Feb Mar Apr May Jun July Aug Sep Oct Number of Brokers Set up under NIBSS Set Up (YTD) 89 November 2016 4 CONFIDENTIAL

5. Analysis of Rejected DCS Account Set-Up Requests Rejected DCS Account Set-Up Requests, Q1 & Q2 2016 45 40 40 38 35 30 25 20 . 15 10 7 4 5 2 2 0 0 0 Irregular Investor Signature at Bank Closed Accounts Documentation Error Pending BVN update at the Bank Q1 Q2 November 2016 5 CONFIDENTIAL

6. Major Challenges 1 Need for Sustained Enlightenment Print/Radio/Television/Social media 2 Delay from Settlement Banks - Confirmation of Account Holder Details Action by the CSCS Lack of Proper Documentation of Investor Account Set-Up Requests by Investors/Brokers - Lead to increased number of rejected Requests - CSCS & Sett. Banks 3 . 4 Unresponsiveness of Some Settlement Banks to confirm account holder details to the CSCS November 2016 6 CONFIDENTIAL

7. Recommendations Drive market initiatives to broaden and deepen sensitization campaign and publicity - Radio /Tele jingles; Talk shows; Print media; Regional investor forums; Social media - SEC,NSE, CSCS, Brokers Further engagement with NIBSS to allow CSCS access to their portal for validation at zero cost, as they are only reconfirming validation already paid for by Brokers CBN/SEC Recommendations CBN to impress on Settlement Banks to respond to confirmation requests from the CSCS. - CBN. . Action by the CSCS Extensive check of DCS forms/documentation by Broker Dealer Firms before submission to the CSCS Dealing Member Firms Continued process/documentation requirements Dealing Member Firms investor education by Broker Dealer firms, on DCS Further engagement with Bank CEOs on improved turnaround CSCS/NSE November 2016 7 CONFIDENTIAL

8. Recommendation (contd) Recommendations . Turn the process on the head Get 5m investors registered - Make DCS Mandatory for all Capital Market Transactions - Make Opt-out from DCS optional Action by the CSCS investors SEC,NSE, CSCS, Brokers November 2016 7 CONFIDENTIAL

9. 9 CONFIDENTIAL

10. THANK YOU Questions & Answers November 2016 8 CONFIDENTIAL