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History of the Central Securities Depository (CSD) in Ghana
Overview
The idea of establishing a Depository in Ghana emerged as part of the country’s broader Financial Sector Strategic Plan (FINSSP), developed in the early 2000s to reform the financial system and attract more investors to the Ghanaian economy.
The National Bond Market Committee was formed to address the challenges faced by the corporate bond market and recommend strategies for its development. A key recommendation of the committee was the establishment of an automated securities depository and clearing and settlement system to enhance the efficiency of the country’s financial markets.
In response to this recommendation, the Bank of Ghana (BoG) and the Ghana Stock Exchange (GSE) took decisive steps towards building a Central Securities Depository (CSD), aimed at eliminating the risks associated with paper-based securities, such as theft and mutilation, while improving investment activities within the financial market.
Establishment of the Central Securities Depository
The Bank of Ghana took the initiative to set up the first Depository in Ghana in November 2004, alongside an Electronic Auction System to manage the issue, custody, and redemption of government securities. This laid the groundwork for a Central Securities Depository that would handle all securities in Ghana.
2002
The National Bond Market Committee recommended the establishment of a national depository.
2003
The CSD Implementation Committee was formed.
2004
The Bank of Ghana established the first Depository and began operations with an electronic auction system for government securities.
To align with the introduction of an Automated Trading System (ATS), the Ghana Stock Exchange set up a Depository, called the GSE Securities Depository (GSD), as a wholly owned subsidiary in 2008. The GSD facilitated the dematerialization of securities and ensured electronic delivery of book-entry securities, improving market efficiency.
Merger of the Depositories
Recognizing the small size of Ghana’s securities market, a merger process was initiated in 2012 to combine the two separate Depositories (Bank of Ghana’s CSD and GSE’s GSD). This merger was supported by the Ministry of Finance to streamline operations, consolidate resources, and create a single Central Securities Depository (CSD) that would serve as a one-stop-shop for all debt and equity transactions in the country.
2012
Merger process was initiated between the two Depositories.
2014
January 1
The merger took effect, with the Central Securities Depository as the surviving institution, owned 70% by the Bank of Ghana and 30% by the Ghana Stock Exchange.