OTC: UBA, GTB, 2 other banks sign deal with CSCS ahead of July commencement

Four banks appointed by the National Association of Securities Dealers (NASD) as settlement banks  signed an agreement with Central Securities Clearing System (CSCS) preparatory to the commencement of operations in July.

The four settlement banks are UBA Plc, Guaranty Trust Bank Plc, Access Bank Plc, and Sterling Bank Plc.

Directors of CSCS, The NASD and the four settlement banks signed the agreement for the CSCS to act as clearing and depository for NASD trades.

Treasurer, UBA Plc, Mr. Emmanuel Onokpasa signed the agreement on behalf of UBA at a ceremony which held at the office of NASD located on the 9th floor of UBA House in Lagos.

The objective of the NASD Limited is to facilitate the secondary market trading of all non-quoted securities in the West African region and also in the process stimulate capital market growth.

The company brings together issuers, investors, accredited dealers, stockbrokers, banks, central clearing systems, private equity and venture capital firms and depositories with a view to increasing liquidity in the non-quoted segment of the long term funding market.

The NASD is approved by the Securities and Exchange Commission (SEC) to operate an over-the-counter (OTC) in Nigeria, which investors in unlisted companies can trade their securities.

OTC is a decentralized market of securities not listed on an exchange where market participants trade over the telephone, facsimile or electronic network instead of a physical trading floor. There is no central exchange or meeting place for this market.

In the OTC market, trading occurs via a network of middlemen, called dealers, who carry inventories of securities to facilitate the buy and sell orders of investors, rather than providing the order matchmaking service seen in specialist exchanges such as the NSE.

Attempts at putting this market together date back to early 1990s, but the market considered too shallow at that time for a robust OTC market.