The Nation Newspaper

Tag: CAPITAL MARKET

  • Capital market remains attractive, say experts

    An average investor has earned more than 50 per cent return in the stock market over the past six years while most above-average investors have earned more than 200 per cent return on investment since the 2009 recession.

    Investment and financial experts at the maiden investors’ forum of Capital Bancorp Plc allayed investors’ fear and provided factsheet that showed that the Nigerian capital market remained attractive in spite of the cycles of appreciation and depreciation.

    Managing Director, Capital Bancorp Plc, Mr Aigboje Higo, noted that while some investors were still apathetic to the stock market because of their losses during the 2008-2009 recession, investors that had invested in the post 2009 era had realized good returns.

    Aigboje who provided statistical analysis from market data noted that many of the investors had realized an average of over 50 per cent returns while some realised above 200 per cent.

    He however noted the need to address some factors that had fuelled investors’ apathy including sharp practices by some operators, ineffective regulation, perception that the market is not fair, bottlenecks associated with the payment of dividend and bonus shares and lack of market liquidity.

    Chief executive officer, RTC Advisory, Mr  Opeyemi Agbaje , who spoke extensively on investment opportunities in Nigeria, said that the privatization policy of the federal government must be pursued vigorously to enhance economic activities.

    He reaffirmed the importance of the complete privatization of the power sector, investment in agriculture for enhanced export and institutional reforms to attract investment into solid minerals sector.

    According to him, policy failures in the management of external reserves, electricity distribution, budget structure, oil structure and cost of governance among others were some of the factors responsible for lack of investor confidence in Nigeria.

    Managing Director, NASD Plc, Mr Bola Ajomale, who spoke on Nigeria’s expanding over-the-counter (OTC) market, said the emergence of the NASD has expanded trading platform for investors in the Nigerian capital market.

    According to him, NASD ensures investor’s protection through its disclosure mechanism and constant notification of the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) of any observable lapses on the part of the quoted companies.

    Ajomale pointed out that no fewer than 63 per cent of the companies quoted on the NASD were profitable, noting that many of the companies were doing well in their sectors.

    Other speakers explained that Nigeria had enormous investment opportunities that could attract both indigenous and foreign investors. But they maintained that appropriate structure must be put in place to reinforce investor confidence.

    Chairman, Capital Bancorp Plc, Mr Olutola Mobolurin had explained that the maiden investor’s forum was part of the company’s efforts aimed at attracting investors into the market through confidence building.

    The forum attracted a diverse sector of the financial market including market regulators, operators, indigenous and foreign investors, analysts, portfolio managers and financial press.

     

  • SEC mulls new regulatory framework for capital market

    THE Securities and Exchange Commission (SEC),  in a major paradigm shift in its regulatory framework, is considering substitution of the class minimum capital requirement with risk-based capitalisation approach.

    Reliable SEC and market sources at the weekend said the  regulator plans to progress from the minimum capital requirement framework, which new deadlines expires on September 30, this year to a more robust risk-based capital base.

    Under the class minimum capital requirement, SEC stipulates minimum capital requirements for all capital market functions. This mostly apply to all operators within each function, irrespective of assets size, operations and inherent risks. SEC had in December 2013 announced new minimum capital requirements for capital market operators with a compliance deadline of December 31, last year. The Commission however extended the deadline till September 30, this year. It has ruled out any further extension.

    With the risk-based capital adequacy framework under consideration, the capital market regulator will align assets’ risk, operations and segmental peculiarities to fashion out a graduated capital requirement scale for all operators, providing each operator with a clear capital guideline in line with its position.

    Sources at SEC said the regulator plans to introduce the risk-based capital adequacy framework to address the failure of the current minimum capital requirement, which does not align a firm’s capital with risk arising from operation, business and market activities.

    Besides, the sources added that SEC would strengthen its enforcement framework for corporate governance by building into the new regulatory framework a strong corporate governance and robust enterprise risk management provisions for all capital market operators.

    Recent events have strengthened the voices of several industry leaders that had called for risk-based capital approach. SEC was recently shocked by the failure of BGL Group, one of the biggest capital market firms, after the  regulator discovered that the firm was bankrupt and running several billion of naira in deficit and unremitted investors’ funds. BGL was categorised as having met the minimum capital base.

    A market source said the change in the regulatory framework would be akin to the 2010 change in banking regulatory framework. The Central Bank of Nigeria’s (CBN’s) Scope of Banking Activities and Ancillary Matters No 3, 2010 requires banks to fully concentrate on core banking functions. The new model requires banks to either sell all non-core banking businesses or form a holding company to hold such non-core banking businesses, including activities, such as insurance, asset management and capital market operations. It led to several divestment and asset sales by most banks while three banks – FirstBank of Nigeria, First City Monument Bank and Stanbic IBTC formed holding companies.

    The source noted that SEC might consider a raised-platform approach that uses the new minimum capital requirements, which take effect now on October 1, 2015, as the base for further derivation of the risk-based capital requirements

    The source said the new approach might receive wide acceptance in the industry and beyond. Most advanced and emerging capital market regulators use risk-based approach. The Chartered Institute of Stockbrokers (CIS), the statutory regulatory body for stockbroking practice, which members form the largest bulk of capital market operators, had also canvassed for risk-based approach. Capital market doyens including Mr. Olutola Mobolurin, chairman of Capital Bancorp Plc, were also in favour of risk-based approach.

    The new director general of SEC, Mr. Mounir Gwarzo, a chartered stockbroker and investment banker with extensive experience across private practice and regulation, has made implementation of the long-term capital market master plan, which entails stronger corporate governance, disclosures and enforcements as well as investors’ education and inclusive participation, as the cardinal programme of its administration.

    Under the new minimum capital requirements, minimum capital base for broker and dealer was increased by 329 per cent from the existing N70 million to N300 million. Broker, which currently operates with capital base of N40 million, will now be required to have N200 million, representing an increase of 400 per cent. Minimum capital base for dealer increased by 233 per cent from N30 million to N100 million.

    Also, issuing houses, which facilitate new issues in the primary market, will now be required to have minimum capital base of N200 million as against the current capital base of N150 million. The capital requirement for underwriter also doubled from N100 million to N200 million. Trustees, rating agencies and portfolio and fund managers had their minimum capital base increased by 650 per cent each from N40 million, N20 million and N20 million to N300 million, N150 million and N150 million respectively. A  Registrar will now have a minimum capital base of N150 million as against the current requirement of N50 million. While the minimum capital base for corporate investment adviser remained unchanged at N5 million, individual investment advisers will have to increase their capital base by 300 per cent from N500,000 to N2 million.

  • Unstable capital market, others affecting PFAs’ performance

    Unstable capital market, others affecting PFAs’ performance

    •Trustfund records 20% growth

    The Chairman, Trustfund Pension Plc, Mrs. Ngozi Olejeme has blamed  instability in the capital market and non-payment of salaries, for the low performance of Pension Funds Administrators (PFAs).

    She listed some of the challenges in the business environment to include the falling oil prices, negative forecast of the outcome of the general elections and the devaluation of the naira.

    Mrs. Olojeme, who spoke during the 7th annual general meeting (AGM) of the firm in Abuja, pointed out that last year was stormy for the pension industry.

    Also speaking, the Managing Director, Mrs. Helen Da-Souza, Trustfund PFA grew funds under management by 20 per cent from N163.8 billion in 2013 to N196.1 billion last year.

    She said the Retirement Savings Account (RSA) fund grew from N163.81 in 2013 to N196.13 billion a year later, while the Retirees Fund grew by eight per cent from N24.68 billion in 2013 to N26.69 billion in 2014.”

    She, however, solicited the support of Trustfund major stakeholders that include Nigeria Social Insurance Trust Fund (NSITF), NECA,  NLC and TUC for the continued sustenance of the growth.

    Olejeme, who spoke through a director in the company, Peter Esele, said: “If one looks at the fact that Trustfund management declared the same 25Kobo dividend in 2013 and 2014, one may not appreciate how the difficulty in the environment in 2014 was.

    “We should not forget that the preparations for the 2015 general elections was at all-time high in 2014, the crash in the price of crude oil in the international market also happened in the same year and non-payment of salaries even at the federal level also took place during that year.

    “There was also the devaluation of the naira and we also witnessed the instability of the stock market where we invested about 30 per cent of our money. Overall, we have about 70 per cent of our resources invested in one form of money market or the other.

    “Coupled with all of these, were all the negative forecasts about the outcome of the general elections. All of these were formidable factors that impacted negatively on the performances of businesses. So, for us, to be able to march what was declared in 2013 is a great achievement.

    “We are also very happy that the shareholders showed massive understanding during the trying period. We are hopeful that with an improving operating environment this year, our shareholders will smile more next year.”

    Esele said  in spite of occasional difficult operating environment, the future for a robust contributory pension scheme is assured.

    He explained that with fierce speed corruption is permeating the social fabric of the Nigerian society, it has find it difficult to penetrate the contributory pension scheme owing to the safety guideline put in place to safeguard the funds.

    “With corruption registering its overwhelming presence in most parts of our national lives, we have not heard any corruption related issues in the contributory pension scheme. the scheme has enough checks and balances that make it practically impossible for anybody to lay hands on the money. Every contributor knows how much he or she has contributed because every contributor receives alert on phone or electronic mails indicating the figures every month. So, people know how much they are entitled to at the end of their work life. The contributory pension scheme is one of the things that have happened to the Nigerian worker,” he said.

  • Capital market regulation and the Judiciary

    In an increasingly competitive global financial system in which countries try to out-compete one another for investment inflows, governments across the world are launching reforms to strengthen their regulatory regimes. Because investors consider the strength and independence of the regulator, amongst other factors before making an investment decision, many emerging markets are empowering their financial system regulatory agencies to give investors adequate comfort and protection.

    Nigeria is actually one of those countries that have strengthened regulators of the financial system by reviewing the relevant laws. The NDIC Act, CBN Act, Pensions Reform Act and the Investments and Securities Act have all been reviewed over the last decade to enhance the powers and functions of the regulatory agencies in charge of the various sectors in our financial system.

    There are, however, signs of a worrying trend in which the regulatory authority of empowered government agencies are gradually being undermined by certain elements within the nation’s  judiciary. While the judiciary has played a key role in the development of the financial system, some latest developments are sending disturbing signals to stakeholders in  the financial system and are capable of not only discouraging renewed zeal of regulators but also encourage malpractices in our markets. A case in point is the well publicized saga between the Securities and Exchange Commission (SEC), the apex regulator of Nigeria’s capital market and BGL Group, one of Nigeria’s largest brokerage and investment banking firms.

    SEC was said to have received  over 40 complaints from various investors  against BGL Group and its subsidiaries between 2012 and date. The total amount involved in these complaints against BGL Group is in excess of N5.8 billion, according to statements released by the regulator.

    As is the normal practice, SEC is empowered and mandated by its enabling laws and Rules to investigate investors’ complaints and facilitate a smooth resolution of disputes within the Nigerian capital market. Based on the above, SEC initiated target inspections of BGL Group and its subsidiaries to ascertain the veracity of investors’ complaints. Subsequently, several all parties meetings were arranged by SEC in which BGL agreed to indemnify affected investors. However,  according to the SEC, “BGL continued flouting such arrangements and reneging on promises to restitute investors”. Apparently, the cases against BGL had dragged on for almost three years without any firm action from the regulator. However, things took an interesting turn when the current Director General of the Commission, Mr. Mounir Gwarzo, took over leadership of the regulatory body in early 2015. He promised to sanitize the market and maintain a posture of zero tolerance for market infractions. True to his words, the SEC obtained a court order from the Investments and Securities Tribunal (IST), the recognised court of law with exclusive jurisdiction to capital market matters, allowing it to set up an Interim Management Team for BGL Group. The team was led by Mr. Oladipo Aina and started work at BGL premises on Friday April 17, 2015. To complement their work, the IMT appointed a forensic auditor to look at the books of BGL and determine its true financial health.

    Shortly after the IMT’s operations began, BGL approached the Federal High Court sitting in Lagos to stop the work being carried out by the IMT and forensic auditors. The Federal High Court thus issued an order on April 30, 2015 asking the IMT and forensic auditors to vacate BGL premises.

    Most observers must have been befuddled by this unwarranted interference since the SEC was acting based on an existing IST ruling permitting it to intervene in order to protect investors. Although SEC recognised the fact that such an order cannot vacate the existing order from IST decided to obey that court order by pulling out the IMT and forensic auditors even though they had a legal case to make that the IST, which enjoys coordinate jurisdiction with a Federal High Court, had given them an order which normally should not be overturned by a coordinate court of law.

    Before pulling out, the forensic auditors had produced a preliminary report confirming the SEC’s suspicion about the dire financial state of the BGL Group. Among the findings are consistent losses over a period of  five years totaling more than N48 billion which was eroding shareholders’ funds; billions of Naira in questionable investments in illiquid securities of unlisted companies (including a company that has even been declared bankrupt); liquidity challenges that make BGL unable to pay investors an outstanding N11 billion in matured funds among others.

    In essence, BGL represented a serious risk to investors, to clients and to the market as a whole. The SEC management therefore decided to suspend BGL Group, its subsidiaries and sponsored individuals and invited them to appear before the Administrative Proceedings Committee (APC) which affords them fair hearing to defend themselves against the allegations.

    Once again, BGL decided to milk the justice system to avoid answering these questions. They obtained yet another interim court injunction on June 9th 2015, mandating SEC to reverse the afore-mentioned suspensions and other related decisions. This was a strange ruling by all standards, firstly, the issue of deference to the appropriate court (IST) was ignored, and the ruling was made exparte, without putting the other party (SEC) on notice.

  • SEC suspends BGL’s firms, Okumagba, others from capital market

    SEC suspends BGL’s firms, Okumagba, others from capital market

    Securities and Exchange Commission (SEC), yesterday came down heavily on one of Nigeria’s leading investment banking groups with the suspension of the BGL Group and its subsidiaries from all capital market activities.

    In a statement,  SEC said its decisions were based on the “report of a detailed investigation into the various complaints received from investors against subsidiaries of BGL Group”. The decisions were taken by the executive management committee at its meeting on Tuesday.

    SEC had late April intervened in the operations of BGL Group Plc, suspended its board and set up an interim management board for the group. The interim management board, headed by a former president of Chartered Institute of Stockbrokers (CIS), Mr Oladipo Aina, was mandated to conduct full investigation into the operations of BGL Group. Other members of the interim board were Mr. Abubakar Ambursa, Mrs. Hafsat Rufai, Ms. Temitayo Siyanbola and Ms. Tonne Ladipo-Ajayi.

    On the basis of the investigation report, SEC yesterday announced the suspension of BGL Asset Management Limited, BGL Capital Limited and BGL Securities Limited from all capital market activities.

    The Commission also directed that all major officials and sponsored individuals of BGL Asset Management Limited, BGL Capital Limited and BGL Securities Limited whose particulars are contained in the Commission’s record as at December last year  be suspended from performing any capital market activity.

    SEC particularly cited Mr. Albert Okumagba, the group managing director of BGL Group and directed that Okumagba, who was the president of CIS before the April sack of the board, should cease to be a registered sponsored individual with the Commission following the withdrawal of the registration of BGL Plc as a capital market operator.  With this directive, Okumagba, one of the most influential capital market operators, will therefore no longer be entitled to carry out capital market activities.

    Besides, the apex capital market regulator stated that it has referred what it described as “suspicious transactions” observed in the course of the investigation to the appropriate law enforcement agencies for further investigation.

    According to the statement, BGL Asset Management Limited, BGL Capital Limited and BGL Securities Limited and all individuals involved in the management of the companies have also been referred to the Administrative Proceedings Committee (APC) of SEC for further trial.

    BGL Plc is quoted on the NASD Plc, the over-the-counter (OTC) market for the trading of shares and securities of unlisted public limited liability companies. Founded in 1993 and formerly known as Banc Garanti Limited, BGL Plc commenced business as a bank holding company with the aim of acquiring distressed or underperforming institutions in the banking sector.

    It quickly built up a large portfolio of assets and earned reputation as one of the most influential investment banking firms in Nigeria. BGL Securities is the stockbroking arm of the group and it is a major dealing member of the Nigerian Stock Exchange. It is ranked variously as one of the top 20 stockbroking firms at the stock market. BGL Asset Management, a wholly owned subsidiary of BGL Plc, was incorporated in April 2007 and it deals primarily as the asset management arm of the group.

  • SEC suspends BGL Plc, Subsidiaries

    SEC suspends BGL Plc, Subsidiaries

    The Securities and Exchange Commission (SEC) has suspended BGL and its subsidiaries from capital market activities.

    A statement from the SEC said the Executive Management Committee of the Commission at its meeting held on May 19, 2015 considered the report of a detailed investigation into the various complaints received from investors against subsidiaries of BGL Group.

    Based on the submissions of the investigators, the SEC noted that “BGL Asset Management Limited, BGL Capital Limited and BGL Securities Limited be suspended from all Capital Market activities and that all Sponsored Individuals of BGL Asset Management Limited, BGL Capital Limited and BGL Securities Limited whose particulars are contained in the Commission’s record as at December 2014 be suspended from performing any Capital Market activity.”

    The SEC also ordered that “Mr. Albert Okumagba, the Group Managing Director of BGL Group, should cease to be a registered Sponsored Individual with the Commission following the withdrawal of the registration of BGL Plc as a Capital Market Operator. He is therefore no longer entitled to carryout Capital Market activities.”

    The statement added that “all suspicious transactions observed in the course of the investigation have been referred to the appropriate law enforcement agencies for further investigation; and that BGL Asset Management Limited, BGL Capital Limited and BGL Securities Limited and all individuals involved in the management of the said companies have been referred to the SEC Administrative Proceedings Committee (APC) which will give all parties to the cases a fair hearing.”

  • 72% of capital market operators deficient, says SEC

    72% of capital market operators deficient, says SEC

    Nearly three in every four capital market operators have not fully complied with extant registration and regulatory requirements required for their various functions, underlining the worrisome corporate governance and compliance status among operators in the capital market.

    Official status report by the Securities and Exchange Commission (SEC) obtained yesterday indicated that about 72 per cent of capital market operators have deficient registrations for their various functions.

    According to the apex capital market regulator, only 269 capital market operators are duly registered for their functions. Also, the Commission stated that there are currently 51 approved fund managers.

    Out of a total of 1,128 capital market operators listed by SEC, 808 operators have deficient registrations. A breakdown of defaulting operators showed that 189 operators have not completed the primary registration requirements for their various functions while 619 operators are currently operating with expired fidelity bonds.

    The status review highlighted that several high-brow law firms, reporting accountants, banks, investment management firms, trading and dealing firms and advisory firms are operating with incomplete registration or expired fidelity bond.

    The report indicated that several operators pose potential risks to capital market operations by not providing fidelity bond against internal malpractices, otherwise known as fidelity bond.

    Operating in the capital market without a valid fidelity bond is a contravention of the Investments and Securities Act (ISA) No. 29, 2007 and SEC Rules & Regulations.

    A fidelity bond is essentially a form of insurance against internal fraud, malpractices and willful professional negligence. It provides cushion for various losses that might arise from employee’s dishonesty. In line with international best practices, the Nigerian capital market regulation requires operators to possess subsisting fidelity bond.

    The expiration of their fidelity bonds makes the functional registration of the companies and individuals as capital market operators incomplete.

    The deficiency in the registration of the operators violated SEC’s policy on fidelity bond, which requires operators to renew their fidelity bond annually, in line with the Gregorian calendar year.

    The fidelity bond policy requires that all registered capital market operators must maintain a fidelity bond which has a validity period from January to December of each year.

    The apex capital market regulator had indicated that any fidelity bond which falls short of full-year coverage will not be accepted.

    According to the report, nearly half of operators with expired fidelity bond, and as such incomplete registration, are solicitors including high-brow Senior Advocate of Nigeria (SAN) law firms.

    Accounting firms are the second largest group of culprits with several well-known accounting firms, with registration as reporting accountants, operating with expired fidelity bonds.

    At least five banks, which were registered as issuing house or investment adviser, were listed among the defaulters while several fund managers, registrars and brokers were also listed in the search.

    Market sources, who pleaded for anonymity because of the sensitivity of the issue, said the large number of incomplete registrations and expired fidelity bonds could affect the integrity of the market place.

    According to them, such deficiencies are usually indications of poor corporate governance and financial liquidity, two factors that have been fingered in most cases of frauds in the market.

    They called on the apex capital market regulators to undertake complete review of capital market operators with a view to delisting non-compliant operators.

    SEC is finalizing the launching of a National Investor Protection Fund (NIPF), which will compensate investors for defalcations by insolvent or bankrupt capital market operators which are not dealing members of Securities Exchange or Capital Trade Points. In other words, the NIPF will be for the purpose of compensating investors whose losses are not covered under the Investors Protection Fund (IPF) administered by Securities Exchanges and Capital Trade Points. The Nigerian Stock Exchange (NSE) already has an Investors Protection Fund (IPF).

    SEC is expected to provide the initial take-off grant for the NIPF. It will subsequently generate funds through grants, subventions, donations and annual contributions to be made by all capital market operators not subject to contribute to the IPF of Securities Exchanges and Capital Trade Points. The board of the NIPF is also empowered to obtain loans, subject to approval of SEC.

    The board of the Commission has already approved the operating rules for the NIPF and it is currently in the process of announcing a board of trustees for the NIPF.

    According to the rules, investors can only receive a maximum compensation of N200, 000 from the NIPF. This maximum amount claimable under the NIPF is 50 per cent of the N400, 000 limit stipulated by the IPF of the NSE.

    According to the rules, the maximum amount payable to an investor who has suffered loss shall be N200, 000 or its equivalent in form of shares and units of bonds. However, where the amount of loss is lesser, the investor shall be paid the calculated amount of loss.

    Beside the variance in the maximum compensation, the SEC’s NIPF also differs from the NSE’s IPF in the area of recognition of previous infractions and losses. Where the NSE’s IPF took on backlog of complaints from the NSE, the SEC’s NIPF will not recognize any claim prior to establishment of the NIPF.

    “Any claim prior to the incorporation of the Fund shall not be covered by the Fund,” the rules stated.

    However, the amount of compensation to be paid by the NIPF may be reviewed from time to time as approved by the board of the Fund.

     

  • Capital market chiefs hail emergence of Gwarzo DG SEC

    Capital market chiefs hail emergence of Gwarzo DG SEC

    Capital market operators have described Gwarzo as a round peg in a round hole and a perfect fit that should be able to impact the market positively.

    On-the-spot opinion survey  supported the choice of Gwarzo as director-general. Gwarzo was on Monday appointed as the director-general of SEC by President Goodluck Jonathan.

    Market operators described Gwarzo as experienced and diligent, noting that his market-wide experience should provide a new verve of energy and initiatives that should drive the market to higher level.

    The erstwhile executive commissioner, Operations, SEC, Gwarzo took over as the acting director-general of the apex capital market regulator on Monday, January 12, this year. He succeeded Ms Arunma Oteh, who completed her five-year tenure on Wednesday, January 7, this year. His confirmation on Monday is, however, still subject to the confirmation of the Senate.

    Section 5, Subsection 1 of the Investments and Securities Act (ISA), the main body of laws regulating the capital market, stipulates that the Director-General and the three full time Commissioners shall be appointed by the President upon the recommendation of the Minister and confirmation by the Senate.

    Managing Director, Capital Assets Limited, Mr. Ariyo Olushekun, said the director-general had worked in nearly all segments of the capital market as a stockbroker and regulator at both the Nigerian Stock Exchange (NSE) and Securities and Exchange Commission.

    “He is an experienced person; I believe he knows the market sufficiently well having worked in various capacities. He should be able to add significant value, he is a good choice,” Olushekun, the immediate past president of the Chartered Institute of Stockbrokers (CIS) said.

    Chief executive officer, Finawell Capital Limited, Mr. Tunde Oyekunle, said Gwarzo should be able to bring his experience to bear on the market.

    According to him, the acting director general is familiar with the operations of the market, which should give him the necessary background needed to succeed in his new position.

    Gwarzo, 50, attended Bayero University, Kano and graduated with a Bachelors in Economics in 1987.  In 1991, he proceeded to the University of Birmingham in the United Kingdom where he obtained a PostGraduate Degree (PGD) in Development Finance. He is a fellow of the Chartered Institute of Stockbrokers (CIS).

    For 25 years, he has played roles in capital market as an operator and as regulator. He had worked at Ministry of Trade, Kano State; Nigerian Stock Exchange, Century Merchant Bank Limited, Empire Securities Limited, Securities and Exchange Commission, Federal Mortgage Bank of Nigeria and MTL Global Investment Limited.

    Gwarzo was recently elected the chairman of the Africa and Middle East Regional Committee (AMERC) of the International Organisation of Securities Commissions (IOSCO).

    IOSCO is the global body of securities regulators and its membership regulates more than 95 per cent of the world’s securities markets in over 100 jurisdictions. AMERC represents a major bloc in IOSCO.

    Gwarzo’s election took place at the on-going yearly meeting and conference of the regional body in Muscat, Oman. His term will run for two years. With the election, Gwarzo is to serve on the Executive Committee of IOSCO, the highest decision making organ of the global securities regulatory organisation for the next two years.

    In his acceptance speech, Gwarzo appreciated AMERC members for the vote of confidence on him and stated that his election was a further commitment of AMERC to build on the foundations laid in advancing IOSCO and AMERC.

    He called on members to continue to promote mutual support and cooperation for the benefit of investors, markets and the world economy noting that there is still a lot of work to be done despite the progress made so far by IOSCO.

    He stressed the need for improved participation in IOSCO work streams and other relevant activities to enhance visibility of AMERC members within the organisation.

    “The essence of our membership of this important organisation is not limited to setting standards only. As critical as standard setting may be to the IOSCO objectives, we also have a responsibility to build the required capacity and be able to deploy these standards for optimum result. We shall also find ways to take full advantage of the numerous opportunities which abound within IOSCO, either in the area of capacity building, enforcement cooperation and information sharing,” Gwarzo said.

    He noted that the Committee will continue to deepen discussions and debates on topical issues, including but not limited to long term financing, financial inclusion and literacy, risk based supervision, corporate bonds market and regional integration.

  • Capital market records gain, naira firms up

    Capital market records gain, naira firms up

    Nigeria’s main shares index soared to its biggest daily gain this year and bond yields dropped as investors cheered Muhammadu Buhari’s victory in a presidential election that passed without disruption.

    The main shares index closed 8.3 per cent higher at a near three-month high yesterday as markets in Africa’s biggest economy welcomed the outcome of the closely-fought vote.

    “The peaceful conclusion of the election has allayed the fears of foreign investors about the market,” Ayodeji Ebo, head of research at Afrinvest told Reuters, referring to the bourse.

    He said most listed firms, especially banks, were trading at a discount to their true value, attracting foreign investors.

    “Investors were waiting on the sidelines to see election concluded in a peaceful manner. So everyone is taking positions now while those that are in are not willing to sell,” Ebo said.

    Foreign investors fled Nigerian markets starting late last year, unnerved by political uncertainty before the vote as well as the sharp fall in the global price of oil, which weakened the currency, triggering devaluation in November.

    The stock index crossed the psychologically important 34,000-point level to stand at 34,392 points, extending gains to a ninth consecutive session — its longest winning streak this year — as President Goodluck Jonathan accepted his defeat.

    The naira gained 0.46 per cent to 217 against the dollar on the parallel market, a black market dealer said.

    The currency traded at 197 naira to the dollar on the interbank market, a level it has traded at since February, after the central bank pegged the rate in a de facto devaluation.

    Yields on sovereign naira bonds fell sharply, with the five-year bond down 101 basis points.

    Nigeria’s economy has been growing by about 7 per cent, but billions of dollars in missing oil receipts and the Boko Haram insurgency that has killed thousands helped to undermine Jonathan’s popularity, analysts said.

    Some analysts said the market rally would be punctured by harsh realities that have blighted economic growth.

    “Market will rally on the back of elections but after that investors will wake up to the reality that the government needs to borrow more to fund its current account, which means bond yields will have to rise long-term,” a dealer at a major bank told Reuters.

    Nigerian dollar-denominated bonds issued by the government and banks rose for a second straight day, with sovereign issues hitting their highest levels since mid-December.

  • Why Nigeria ad agencies are not listed in capital market

    Unlike one of the world biggest advertising conglomerate, WPP which started its operation as Wire and Plastic Product with $21 billion market capital, the President of the Nigerian Stock Exchange (NSE), Mr. Aigboje Aig-Imoukhuede has identified scarcity of capital, strange business structure as some of the challenges militating against listing of Nigerian advertising business concerns on the floor of the capital market.

    Aig-Imoukhuede, who spoke as a special guest at a dinner in honour of new chairman of Advertising Practitioners Council of Nigeria (APCON), Mr. Uffot Udeme organised by E-Motion Advertising,  said part of the reason for non-listing proposal is as a result of scarcity of capital.

    “Scarcity of capital prevent agency from deploying powerful tool to change. The constraint is not lack of ability and ideas, but capital. That can change by coming to the capital market. I only know the industry some few years ago as a convivial group of people of like minds. It was later I discovered that APCON is an important organ of the government. As you do know our economy is facing challenges and it is tough for business. The principal source of our problem is a very strange structural relevance and foreign exchange. People will talk about import substitution and diversification as the solution to some of our economy challenges, but I think the strongest source of diversification is profession, Nigerian Professional, be it law or advertising.

    “Why do we find it difficult to monetise our profession? You will tell me you need an advert. I know what advert has done to Access Bank and some of our business concern but how come you don’t find advertising agency listed on the NSE?,” he querried.”

    He said one of the world biggest advertising conglomerate such as WPP started as a business before diversifying into advertising. He said while it will be strange to most people to know that WPP was formally known as Wire and Plastic Product company, it has grown to become one of world biggest agency with $21 billion market capital.

    “The question for me is I see talent and ideas in Nigeria agency. I saw the impact of Udeme’s SO&U agency played in GTB with ‘Shouldn’t You Bank with U” advert and Access Bank Bullet Train advert. But I now understand why his agency and Udeme are not receiving Sorrel salary and earning or listed on NSE. There is scarcity of capital. Why do agency shoot advert in South Africa using Nigerian characters, storyline? It is because SA agencies have access to capital to build structure,” he said.

    He advised practitioners to use the stock exchange to build their business and expand to compete with global agencies. He said NSE is means of mobilising capital to build their business. “Your industry should use the capital market to develop the industry, build structure, so that no Nigerian advert agency will shoot an advert in South Africa.

    Meanwhile, the Chief Executive Officer of E-Motion Advertising, Mr. Paul Onyia, urged the new council under Udeme to address issues of lingering debts and regulation of political advertising. “I do believe that among other very important issues lingering debt issues in the industry which, in all sincerity, is getting worse by the day. Two is the issues of regulation of political advertising campaigns,” he said. He urged APCON to address some of these issues raised for the industry to develop.

    Udeme, however, promised to work with critical stakeholders to drive the advertising reform which the previous council chaired by Mr. Lolu Akinwunmi got the federal government to gazette.