| 3rd October 08 You must have severally heard or read about the CSCS and keep wondering what it is. Some people often confuse it with stock brokerage. This article is meant to give you an understanding of the CSCS. What is it all about? How does it operate? Who owns it? What function does it perform? What does it have to do with your as an investor and your stock broker? The CSCS The acronym is Central Security Clearing System. It is the store house of all share certificates that are duly registered. The CSCS is a government agency which keeps the records of investors in the different companies listed on the stock exchange and act as a clearing house for investors who trades on their shares. When you want to open and account with a stock broking firm, the form you will be given must bear the CSCS identity. The form will be submitted to the CSCS where you will be registered as a user and given a clearing house number and an account number. This account number is different from your in-house account number with your stock broking firm. When you buy shares from a public offer, you will be given a share certificate as an evidence that you bought the shares. The certificates remain ordinary paper until you present them to your broker for demobilization so that you can start making money from trading in your shares. You cannot trade on your shares without taking this vital step. The CSCS could be accessed online and you can personally monitor your investment if you register with the online CSCS subscription service. How To Open Account With A Broker You will often be required to fill a simple form with the details of your demographic date such as name, age, sex, occupation, address etc. Your passport will also be demanded. Make sure you enter a valid permanent postal address for easy correspondence. This is still necessary despite the e-dividend policy of the stock exchange. Some brokers will open the account for you free of charge but others demand payment ranging from N2,000 to N5 million. How To Choose A Reputable Stock Broker Find below what you must consider before signing up with any stock broking firm. (1) Does Your Broker Execute Orders As Mandated? Some brokers delay the order of their clients unnecessarily. There have been complains of instances where orders are not executed up to 6 months or more. This kind of situation frustrates investors and lead to loss of investment opportunities. Some brokers even engage in the dubious practice of buying and selling contrary to the orders of their clients. Make sure you don’t pitch your tent with such brokers. Carry out your due diligence before choosing a broker. (2) Does Your Broker Charge Recommended Commission? The approved transaction commission for buy and sell in the NSE is 2.6745% and 2.355% respectively. Some brokers dubiously charge ignorant investors outrageously so make sure that you pay attention to the commission charged by your broker. It is always written in your contract note. Any broker who overcharge you is definitely not worth your patronage. (3) Does Your Broker Have An Office? Do not do business with any broker without an office. Also ensure that your broker make your CSCS statement available to you regularly. If you are not given, ask for it. Remember that your investment is your business. Do not leave it to the whim and caprice of any stock broker or financial adviser. |
To Your Investment Success
Benard Solomon
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