Lusaka Securities Exchange (LuSE)

Lusaka Clearing & Settlement Agency

Establishment of the Lusaka Clearing and Settlement Agency (LCSA)

The Lusaka Clearing and Settlement Agency (LCSA) was established in 2020 by the Lusaka Securities Exchange Plc (LuSE) as part of a strategy to serve the market in a more efficient and effective manner. The LCSA is an entity that provides depository services that include automated delivery, clearing and settlement services. Services include the creation and management of investor and custodial accounts at beneficial owner level, facilitating secure and efficient transactions in the capital markets and other depository related services. Clearing and settlement agencies are regulated under the Securities Act, which provides a legal framework to support their operations.

LCSA is a crucial player in fostering market integrity and lowering counterparty risks within the capital market. Through the operation of its CSD platforms the LCSA can effectively carry out its key role of being the settlement agent for secondary trading of Government Bonds, Corporate Bonds and Equity. The LCSA brand name will be supported by the brand name LuSE which has been in the market for over 30 years

Check out the composition of the LCSA Board.

Our Services

Central Share Depository (CSD)

We act as the Central Share Depository (CSD) for the Lusaka Securities Exchange Plc and by playing this crucial role we provide increased integrity to the conduct of the market. Additionally, our role entails that we

  • enable members to hold book-entry accounts for dematerialized securities.
  •  settle transactions between members on a delivery versus payment (DvP) basis,
  •  provide basic custody services whilst working with the other two sub
    custodians on the market namely Standard Chartered Bank Nominees and Stanbic Bank Nominees.

The types of instruments typically eligible to be deposited in a CSD include equities, government bonds, corporate bonds, and money market instruments.

Deposits:

LCSA accepts deposits of certificates from Clients through their brokers. Duly filled Deposit Forms must accompany certificates.

Clients can withdraw securities from the LCSA by submitting a request through their broker.

Securities can be transferred between different participants of the same client. Request to be made through Participants using LCSA Depository Transfer Form duly signed by clients.

Securities can be pledged in favor of a lending institution upon request from a client. Request to be made through Participants using LCSA Pledge Form.

LCSA provides files containing the list of shareholders to registries, for bonus or rights issues entitlements, consolidation of shares and dividends.

Clients can withdraw securities from the LCSA by submitting a request through their broker.

LCSA is mandated by the Association of Numbering Agency to be the sole numbering agency for issuance of ISIN codes for securities in Zambia.

The Association of National Numbering Agencies (ANNA) is a global member association of National Numbering Agencies (NNAs) seeking to foster standardization within the financial industry by upholding the International Organization for Standardization (ISO) principles and by promoting ISIN, FISN and CFI codes for financial instruments. This is done through ongoing, collaborative work with market participants, regulators, and other standards bodies.

We support LuSE by providing clearing services. Clearing is the process through which the obligations held by the buyer and seller to a trade are defined and legally formalised. It is done in preparation of settlement on trades executed on the LuSE. This procedure establishes what each of the counterparties expects to receive when the trade is settled. It also defines the obligations each must fulfil, in terms of delivering securities or funds, for the trade to settle successfully.

Once a trade has been cleared, the respective obligations of the counterparties are agreed, and the trade then progresses to settlement. Settlement takes place on a Standard settlement date which is T+3 for equity on the LuSE and T+1 for Secondary Bond trading; where T is the trade date and T+3 is three business days later. So, for example if a trade is undertaken on a Monday and settlement is T+3, settlement will take place three business days later, on Thursday. If a trade is undertaken on Thursday for T+3 settlement the trade will settle on Tuesday.

On the settlement date, the LCSA sends instructions to the settlement bank where funds transfer between the Seller’s and buyer’s Participants takes place and immediately after this, the seller’s Securities Account is debited, and the buyer’s Securities Accounts is credited. This ensures strict delivery versus payment.

We act as note trustee for note issues, pursuant to trust deeds signed with our clients. As part of this role, we undertake the following Trustee Services:

  • (a) Hold securities on behalf of the note holders.
    (b) Attend meetings.
    (c) Review reports and statements.
    (d) Monitor compliance obligations; and
    (e) Negotiate and execute transaction documents.