Capital market operators at the weekend in Lagos called on the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) to grant them single dealing license to access discount window.
Speaking at the 2017 annual conference of Capital Market Correspondents Association of Nigeria (CAMCAN) in Lagos, Mr Sonnie Ayere, the Group Managing Director, Dunn Loren Merrifield, explained that issuance of single dealing license would boost liquidity of the operators and facilitate a more robust transactions.
He stated that the reform would provide a much stronger platform for market based financial intermediation to thrive, ensure that they were well capitalised and regulated.
Ayere, who is also the President of Association of Issuing Houses of Nigeria, said that issuance of a combined Capital Market Dealing license would reduce the numbers of licenses being issued.
“We are proposing that the CBN allow capital market institutions with the requisite capital (as agreed by CBN) access to Primary Auctions on behalf of themselves and their customers.
“Discount Window access can then be given to such operators to be able to discount for liquidity purposes all instruments normally acceptable to the Central Bank of Nigeria”, he said.
He said that the CBN should not focus only on commercial banks, saying that the combined capital base of issuing houses, stockbroking firms was not up to the capital base of a smallest bank in the country.
Ms Kaodi Ugoji, the Vice President and Divisional Head, Corporate Planning, who spoke on the same topic, noted that the country had been affected by illiquidity, lack of regulatory framework and high focus on risk free securities.
Ugoji added that because of illiquidity in the market companies were borrowing short term funds to finance long term projects.
She said that there was the need to introduce measures to enlarge the domestic institutional investors’ base, particularly through pension sector reforms.
According to her, the importance of a strong and viable domestic capital market as an alternative source of finance in emerging economies has been affirmed by the success it has enjoyed in countries such as Brazil, Malaysia, Russia, India and China.
“With government economic reforms running at full throttle, prospects are high for the sustained development of the Nigerian Capital Market as a viable tool for driving Nigeria’s economic growth.
“Countries that have successfully leveraged the capital market for economic growth have a number of similar characteristics, some of which include: large domestic institutional investor base, developed infrastructure, macroeconomic stability.”
Also speaking at the event, the Acting Director-General of Securities and Exchange Commission (SEC), Dr Abdul Zubair, disclosed that the total value of issuances in the Nigerian capital market amounted to N1.55 trillion in September.
Zubair said that the issuances included equities, bonds and unlisted securities among others.
Zubair said that the equities accounted for 12 per cent of the total value of issuances in the market during the period.
He said that the secondary market total equities transactions appreciated by 78.6 per cent to N1.66 trillion between 2016 and September 2017.
The acting director-general said that foreign transactions increased by 47.31 per cent during the period.
He added that the Nigerian Stock Exchange (NSE) All-Share Index had returned 47.11 per cent as at Dec. 7, showing a remarkable recovery.
On the theme, “Deepening the Nation’s Capital Market for Economic Growth’’, Zubair said that the commission had designed and implemented laudable programmes to create more awareness and further deepen the market.
He said that SEC joined its counterparts all over the world to mark the IOSCO World Investors Week in Abuja and Lagos, bringing together stakeholders, investors and students to promote financial inclusion.
According to him, an ivestor education portal dedicated to educate investors on financial literacy and activities of the capital market has been designed and contents uploaded to deepen market participation.
NAN quoted Zubair as saying the portal would soon be launched to become accessible to all market participants.
He, however, assured the investing public and stakeholders of its commitment of ensuring an uninterrupted and orderly operation of the market and regulations.
Zubair said that the commission would continue to ensure market efficiency, accountability and transparency in the capital market.
He enjoined the media to continue to support the commission in disseminating information about the capital market.
“The commission is poised to continue to ensure the stability of the Nigerian capital market and maintain the high level of investor confidence observed in the market,’’ Zubair said.
He said that SEC set up and inaugurated the board of the National Investor Protection Fund (NIPF) to restore investor confidence in the market, noting that hundreds of investors till date had benefited from the fund.
“It will be recalled that from a peak of N12.6 trillion in March 2008, the stock market suffered a setback arising from the global financial crisis, plummeting to N7.3trillion by December of that year.
“Retail investors became apathetic to investment in the capital market. In order to restore their confidence, the National Investor Protection Fund was set and inaugurated by the SEC board.