A custodial service refers to when a corporate entity or individual (custodian) holds a property or asset on behalf of a client. Specifically, a custodian is a financial institution that holds clients’ securities for safekeeping in order to minimize the risk of theft or loss. Securities such as share certificates, bonds, stocks and treasury bills are some of the assets a custodian holds for clients. Custody services are available to a wide portfolio of clients, including unit trust schemes, pension funds, corporate clients, high net-worth individuals, financial institutions, foreign, local and individual investors, insurance funds, fund managers, brokers, and dealers.
The session, which held in Lagos recently, had the theme “Future of Custody in Nigeria – Meeting Global Standards,” providing a peep at global technological changes and the future of custody. In attendance at the event, which also featured a panel discussion, were local investors, fund managers, asset managers, pension fund managers, insurance companies, capital market players, regulators, policymakers, bankers and other stakeholders from the private and public sectors.
According to the Chief Executive of Stanbic IBTC Nominees Limited, Mr Akeem Oyewale, change is inevitable in life and in business, which makes it imperative to keep track of developments in the market. Such new insights, he added, provide that vaunted springboard to opportunities that maximise business and investment success.
“In the area of business we operate, change is a constant thing and as such it is critical to intimate our clients on what is changing in our market and in the industry. Changes can be regulatory, industry or competition driven, or it could be set off by enhanced risk awareness, as well as environmental and technological changes,” Oyewale stated.
Technological changes, for instance, have engendered big data analytics, which avail real-time information as well as generate actionable insights that help managers enhance business performance, increase efficiency and lower structural costs and risks. He also noted that blockchain technology, as disruptive as it may seem, offers numerous benefits such as proficient systems and processes leading to cost efficiencies and value-added solutions.
New opportunities for growth, triggered by a variety of factors, are consistently emerging in the wealth creation and management space and tapping into such opportunities requires having the right information that aids successful planning and implementation, Oyewale stated. This realization underlines Stanbic IBTC’s determination to arm its clients with requisite information and tools to stay ahead of the curve.
Custodianship is a pivotal component in the capital market value chain, Oyewale stated, adding that as the level of awareness on how to harness the benefits of custodianship is still low in Nigeria, all hands should be on deck to bring everyone on board for mutual benefit.
According to him, advances in technology have enabled custodians to expand product solutions well beyond their traditional roles of settlement and safekeeping to reporting on and monitoring fund investment portfolios, which is consistent with increasing demands on corporate governance, as well as the increased accountability expected of fund managers and/or trustees.
The Securities and Exchange Commission (SEC), represented by the Director, Lagos Zonal Office, Mr Stephen Falomo, commended Stanbic IBTC for organizing the event, which is vital for individual investment success and sustainable economic growth. “This sort of forum is needed to ensure that information on custodial services, as a significant component in capital market development and growth of the Nigerian economy, continues to be disseminated, thus making sure that participants in the capital market are positioned to benefit from this development,” he said.
The Commission emphasiszed that organisations involved in providing custodial services understand that the growth of the business depends on their capacity to attract investment, deploy effective technology and competently process large transactions, while effective policies and procedures as well as a strong regulatory environment are essential in the custody business of today.
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