The BSE’s securities depository reaches milestone

Total dematerialisation earns BBB rating for CSDB


The Botswana Stock Exchange’s wholly owned subsidiary, Central Securities Depository of Botswana (CSDB) has achieved an upgraded rating of BBB, with a positive impact rating by Thomas Murray Data Services after achieving total dematerialisation. Further, the CSDB has been rated A+ with a positive risk impact with respect to “Asset Safety Risk”. According to Thomas Murray, a supplier of global capital market infrastructure data, the category of “Asset Safety Risk” is defined as ‘the risk that assets held in custody at the CSDB may be lost or misappropriated, either due to a default or an omission, misuse, or breakdown of controls, legal, operational or others.”
In the last assessment by Thomas Murray on 12th May 2016, the dematerialization status was 90.5%.
According to a statement from Thomas Murray released on 1st August 2016, “The dematerialization of shares and other securities will eliminate the risks associated with physical certificates such as mutilation, theft and loss, duplication of shares, signature mismatches and transfer problems.” Commenting on this important milestone, the Chief Executive Officer of the BSE, Thapelo Tsheole, said:
“This is an impressive achievement to us as a group. The advantages of 100 percent dematerialization of shares are that it reduces the risk of fraud and forgery associated with physical share certificates,  ensures that information on shareholding is readily available from the CSDB and also allows investors to trade anytime and from anywhere by simply instructing the brokers without the need to deposit certificates in the CSD system. Dematerialization of listed securities has been made compulsory in many markets in which CSDs have been introduced and this is to make clearing and settlement more efficient.”
“The BSE and CSDB will benefit positively from this milestone as it will pave way for CSDB to venture into  areas such as provision of custodial services, registry services, information repository as well as Securities Borrowing and Lending. We hope to see the CSDB’s rating improve because we are currently finalizing key projects such as the Business Continuity Management (BCM) policy that will have a positive bearing on other assessment criteria within the Thomas Murray risk rating methodology,” Tsheole added.
The positive risk rating of the CSDB and the implementation of the BCM policy will also improve the BSE’s compliance with the principles of the International Organization of Securities Commission.
Compliance with international principles is important to attract foreign investors and promote market confidence in as far as governance and management of systemic risk in our market is concerned.