Update on Direct Cash Settlement DCS Implementation in

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

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

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) 235 200 2 3 ED ER TO ST D. CH AR T NE 0 B Y SS CE AC DI AM ST AN LIT DE FI EC O A UB NI TH SK YE ZE ST ER LIN G B GT FB NH 0 21 0 YS 0 M 9 KE 12 5 FC 15 TA GE 38 RI 49 28 N 6 HE 50 UB . 100 ON D 136 150 BI C 250 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, Stanbic. IBTC , UBA, Union Bank November 2016 Note: Responsiveness implies 48 hours revert to the CSCS CONFIDENTIAL 3

Update on BVN Validation by Brokers on NIBSS Portal (YTD) 900 791 762 800 741 680 700 604 595 600 500 480 442 433 400 336 300 . 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 CONFIDENTIAL 4

Analysis of Rejected DCS Account Set-Up Requests, Q 1 & Q 2 2016 45 40 40 38 35 30 25 20 . 15 10 7 4 5 0 2 2 0 Irregular Investor Signature at Bank 0 Closed Accounts Documentation Error Q 1 November 2016 Pending BVN update at the Bank Q 2 CONFIDENTIAL 5

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 November 2016 3 Lack of Proper Documentation of Investor Account Set-Up Requests by. Investors/Brokers - Lead to increased number of rejected Requests - CSCS & Sett. Banks 4 Unresponsiveness of Some Settlement Banks to confirm account holder details to the CSCS CONFIDENTIAL 6

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 Action by the CSCS 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 CBN to. impress on Settlement Banks to respond to confirmation requests from the CSCS. - CBN. Extensive check of DCS forms/documentation by Broker Dealer Firms before submission to the CSCS – Dealing Member Firms Continued investor education by Broker Dealer firms, process/documentation requirements – Dealing Member Firms on DCS Further engagement with Bank CEOs on improved turnaround – CSCS/NSE November 2016 CONFIDENTIAL 7

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

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THANK YOU Questions & Answers November 2016 CONFIDENTIAL 8