THE ROLE OF CSDs DURING ENVIRONMENTAL CRISIS OR OPERATIONAL DISRUPTION THE ROLE OF CSDs DURING ENVIRONMENTAL CRISIS OR OPERATIONAL DISRUPTION A PRESENTATION FROM: CENTRAL SECURITIES CLEARING SYSTEM LIMITED ON A PRESENTATION FROM: CENTRAL SECURITIES CLEARING SYSTEM LIMITED ON

The role of Central Securities Depository (CSD) around the world is unequivocally essential to the economies of the world especially its attendant significance in enabling book entry transfer of securities. The business of clearing and settlement of Securities and other processes ensuring operational integrity are critical in every market especially in this era of electronic records. In this light, CSDs should as a matter of necessity put-up operational capability and potential that will guarantee ability to function effectively, even in a disaster situation. This paper seeks to elicit actions needed in mitigating down time and business disruption in the event of unforeseen circumstances.

Business as with life is a cycle and keeping that cycle running requires adequate planning and anticipation of the things that could happen, whether they be good or bad. That is why Central Securities Clearing System Limited (CSCS) as the clearing house of the Nigerian Stock Exchange (NSE) and the only CSD in Nigeria considers a robust Business Continuity Plan (BCP) critical to CSD strategic operations. To achieve this in the face of infrastructural challenges and budget constraints is a huge task. Despite that, CSD operators should have focussed short, medium and long term strategies to ensure investors asset is secure and available all the time. Discipline is of essence in following through the plan. BCP is a kind of planning method that recognizes and identifies a corporation or a businesss potential to be exposed to external and internal threats, therefore projecting the possible prevention strategies and recovery plans for the company.

In Nigeria, our short-term approach focussed on Disaster Recovery (DR) strategy. The Nigerian Stock Exchange (NSE) trading engine (Horizon) is tightly-coupled with the CSCS clearing and Settlement System (Equator). This is achieved at the production environments of NSE and CSCS. The same architecture was also setup at the DR sites of CSCS Digital Centre. Both NSE and CSCS production servers replicate to the DR servers at online/real-time. This process has been achieved.

CSCS is currently reviewing its BCP for the benefit of the Nigerian capital market. Currently, plans are on-going to move our Primary DR from its current location of about 8.3km from Head-Office to another location which is about 20.7km from Head office to extend the distance and reduce the risk of having both the head office and the DR site to be affected by the same disaster event. Another current DR site in Abuja will also be upgraded to have the level of facilities available at the primary DR site. On completion of the on going projects, CSCS will have direct link to all DR sites and eventually have three points of failure i.e. Head office, Ikeja and Abuja as opposed to the current position.

As the communication infrastructure improves, we are poised to upgrading the transmission channels with high speed and more efficient and effective technologies. Our focus on strategic sites will shift from country to regional as well as continental. This is where cross boarder collaboration with other CSDs that have built Data Recovery Centre capacity will be explored for shared services. We have considered establishing a BCP Countermeasure Office to take corresponding actions for continuity of business operations, including assessment of the damages, and assurance of communication connectivity to market participants and related entities.

CSD operations, globally, is critical. We the operators should be conscious of risks associated with the management of the infrastructure and other resources needed for a sustained and reliable business function. No one can predict whether or not a disaster will strike your organization so the key is to be prepared at all time in order to Mitigate exposure to system failures and disastrous events; Decrease costs linked to failures or disasters; Improve decision-making times during a crisis or disaster; Reduce organizational impact in a disaster or failure; Limit the organization's legal liability; Protect the organization's reputation; Provide a methodical recovery strategy. Having an effective framework for Business Continuity will provide a higher level of comfort during emergencies.