The Central Bank of Nigeria (CBN), last week, released an exposure draft guidelines on settlement of all types of securities in the country.

According to the apex bank, the guidelines draft is in line with the powers conferred on it by Section 47 (2) of the Central Bank of Nigeria Act 2007 to promote and facilitate the development of efficient and effective systems for the settlement of transactions.

It, however, noted that it was without prejudice to the powers of Securities & Exchange Commission (SEC) conferred on it by section 13 of the Investments and Securities Act 2007.

The guidelines set out the procedures for the settlement of securities in Nigeria, including the rights and obligations of the parties. It also covers the settlement procedures and settlement cycle for: the Nigerian Stock Exchange (NSE) traded securities; Over The Counter (OTC) Securities; Government Securities (Treasury/bills, bonds, etc); Commodity Exchange traded securities, and dividend and interest payments.

The apex bank listed parties to Securities Settlement in Nigeria as: Central Securities Clearing System (CSCS) Limited; Stockbrokers; Deposit Money Banks (DMBs); Capital Market Registrars; CBN and Nigeria Inter-Bank Settlement System PLC. Others are Payment Service Providers; investors; discount houses and such Other Financial Institutions (OFIs) as may be prescribed by the CBN from time to time.

 In the guidelines, CBN shall have the responsibilities of providing oversight functions on electronic payments; ensuring adequate laws are put in place to safeguard the interest of all parties; apply appropriate sanctions in the event of default and review and amend the guidelines in conjunction with SEC from time to time.

The banking watchdog noted that dispute resolution mechanism in respect of securities settlement shall be governed by the relevant rules issued by CBN, SEC, The NSE and IST, adding that regulatory bodies would review and apply appropriate sanctions in the event of default and/or infractions.