[ M A R K E T R E V I E W | A F R I C A ] number of available direct sub-custody providers becomes very limited .” Like any industry sector , this situation comes down to whether there is enough sustainable business to warrant the time and resources to set up a sub-custody business . “ With the exception of South Africa - and maybe Nigeria and Kenya - the markets are not sizeable enough to have multiple competitors and active competition as global custodians may prefer ,” says Bogart Miheaye , regional head of network management for Western Europe , Middle East and Africa for BNP Paribas Securities Services . “ It is essentially a matter of volume . In smaller markets , we could argue that it does not make sense to have more than one provider and it may not prove to be beneficial for clients in a small market .” It would , however , be unfair to ascribe the relative underperformance of sub-Saharan markets as due to inertia on the part of the relevant stakeholders . Indeed many of the markets are taking steps to upgrade their market infrastructure to meet the requirements set out by institutional investors . This should , in principle , enable existing sub-custodians to enhance their offering , while nurturing greater competition . In the case of Nigeria , for example , the authorities are have been working on implementing the automation of issuance , storage and administration of the Certificate of Capital Importation ( CCI ), the document governing inflows and outflows of FX for investment purposes .
“ The enthusiasm exists across the region to adopt and implement internationally recognised best practice , e . g ., shortening settlement cycles to T + 3 , introducing new CSD systems to reduce manual processing and associated risks ,” says Roy . Legislative and infrastructural innovation is not , however , limited to the larger African markets . In Botswana , for example , the BSE is considering the introduction of market making on the bourse and have come up with market making rules . These rules have been framed to provide liquidity in listed securities by submitting both bids and offers for a designated security during the designated Market Making session . The rules are currently awaiting regulatory approval .
“ The markets are not sizeable enough to have multiple competitors and active competition as global custodians may prefer .”
BOGART MIHEAYE , REGIONAL HEAD OF NETWORK MANAGEMENT FOR WESTERN EUROPE , MIDDLE EAST AND AFRICA FOR
BNP PARIBAS SECURITIES SERVICES
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