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Clearing System Payment Systems
Introduction | Roles | Modes | Clearing & Settlement | Framework | Achievements | RTGS
Clearing & Settlement System
Automated Clearing House (ACH)
- Cheque Clearing Process:
To ensure process efficiency in the Cheque and other retail payment arena, the Nigerian Automated Clearing System (NACS) was established by the CBN in collaboration with other stakeholders. NACS rides on the Nigerian Inter-bank Settlement System (NIBSS) infrastructure and began operation in 2002 in Lagos. Presently, NACS operates in Abuja and there are plans to implement NACS to other major cities before the year ends.
Currently, clearing activities in all other Non-NACS clearing houses across the country have been semi-automated using the MICR technology which began since 1991. At the completion of full automation of the clearing houses and subsequent deployment of NACS nation-wide it is expected that the clearing cycle will significantly reduce from the present T+3 and T+5 for local and upcountry instruments respectively.
Inter-Bank Fund Transfer System
Presently, the Inter-Bank Fund Transfer System (IBFT) essentially caters for
large inter-bank transfers. However, third party transactions are often handled.
The establishment of NIBSS in 1993 to facilitate IBFT was designed in such a way that funds flow among banks and other financial institutions such as Discount Houses are on a deferred net basis.
In line with global trend in managing inherent payment and settlement risks in large value payments, the CBN commenced the implementation of the Real Time Gross Settlement System. The operational run of the CBN RTGS System has since begun. The CBN RTGS (Central Bank of Nigeria Inter-bank Fund Transfer - CIFT) System is expected to achieve secure interoperability with other payment and settlement system in the country thereby ensuring continuous and immediate payment settlement with intraday finality as well as delivery versus payment in all securities transactions.
Securities Settlement Systems
- Government securities
At present, transactions in Government securities are being handled by the CBN. Major categories include treasury bills, treasury bonds as well as FGN bond. The Treasury bills, which are normally short term has tenure of 91-365 days and bonds which are mainly medium and long term have tenure of 3-20years.
To facilitate transaction Authorized dealers (Banks, discount houses and special stock brokers) are required to open an account with CBN. The securities are issued largely on book-entry basis. On redemption, the Current accounts of the authorized dealers are credited in their favour or in favour of their customers.
- Equity Securities
Transactions in equities are conducted through the Nigerian Stock Exchange (NSE). Beginning from April 1997, the clearing and settlement activities at the Nigerian Capital Market improved drastically with the coming on stream of the Central Securities Clearing System (CSCS), a subsidiary of the NSE. This resulted in the ability of the exchange to operate a Delivery-Vs- Payment trading regime on a rolling T+3 transaction cycle. The settlement is achieved through NIBSS which facilitates the inter-bank settlement between CSCS designated settlement banks at which the stockbroking firms maintained trading account.
To reduce trade cancellation and eliminate "failed trades", a trade guarantee fund exists and managed independent of the Exchange/CSCS. As such recourse is made to the fund whenever a stockbroking firm fails to fund its account for trade settlement not later than day T+3 (settlement day).
($150,000)
