The Nation Newspaper

Tag: capital

  • Capital market operators seek extension of recapitalisation deadline

    Capital market operators have begun intense lobbying of the Securities and Exchange Commission (SEC) with a view to securing many concessions, including a possible extension of the deadline, on the ongoing recapitalisation of the minimum capital requirements for operators.

    A reliable source indicated that the operators, majorly under the aegis of the Association of Stockbroking Houses of Nigeria (ASHON), Association of Issuing Houses of Nigeria (AIHN) and the Chartered Institute of Stockbrokers (CIS), have made several entreaties to the apex capital market regulators to reconsider certain elements of the recapitalisation plan.

    The elements included the structure of the capital requirement that fixed a minimum amount irrespective of the size and scope of operations of a firm, the implementation process and the deadline for full compliance.

    According to the source, the “positive interface” with SEC was yielding results. Although the operators were yet to secure the two major concessions including the restructuring of the capital requirements on a risk-based level and the possible extension of the January 1, 2015 takeoff date for the new capital base.

    As part of the results of the interface, SEC has extended the September 5, deadline for capital market operators to submit their recapitalisation plan.

    The extension, the source said, was to give room for further discussions among operators on the ways forward on the recapitalisation, especially through the options of mergers and acquisitions.

    The Nation had exclusively reported that several operators were considering mergers and acquisitions as alternative plan while the bodies of operators continue to press the case for risk-based capital structure that will allow many niche and small operators to continue their businesses independently.

    The recapitalisation plan will now be submitted at a later date after a one-day workshop on mergers and acquisitions to be organised later this month by ASHON and AIHN.

    The source hinted that mergers and acquisitions plans could be used to push for extension of the December 31,  deadline given the intricacies and extended timeline for successful merger and acquisition deal.

    SEC had announced major increases in minimum capital requirements for capital market functions under a new minimum capital structure that is expected to take off by January 1, next year. Minimum capital base for broker/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.

    Besides, dealing members of the Nigerian Stock Exchange (NSE) are contending with minimum operating standards recently introduced for all the three classes of dealing members including broker dealers, brokers and dealers.

    The new standards address the five broad areas of manpower and equipment; organisational structure and governance; effective processes; global competitiveness; and technology. The new standards are also expected to take off on January 1, 2015, just as the new capital requirements by SEC.

    The Nation had reported that an emergency meeting called by ASHON had reached consensus on the need to develop alternative plan to ensure that as many as possible operators scale through the new capital requirements.

    The alternative plan is expected to serve as a rescue option in the event that the ongoing engagement on the new capital requirements between the stockbrokers and other operators and the capital market regulators fails to yield any meaningful relief.

    While stockbrokers were optimistic that the capital market regulators would consider reduction in the capital requirements and a reclassification of the minimum operating standards, they were worried that outright implementation of the capital requirements would reenact the “Soludo effect” in the capital market, a reference to capital base-centered banking reforms under the former Central Bank of Nigeria (CBN) Governor, Professor Charles Soludo, during which number of banks reduced from more than 80 to less than 25.

    The alternative plan, according to the sources, will include mergers, acquisitions and raising of new funds through any of debt and equity means.

    A source at the meeting noted that stockbrokers, mainly founded on sole entrepreneurship, are now more than before open to discussions on mergers and acquisitions, giving the shrinking operating space for small firms in the industry.

    An informed estimate indicated that not less than 180 stockbroking firms may be affected by the new capital requirements, given their current state of illiquidity and operations.

    There are some 322 stockbroking firms listed as members of the NSE. A recent report by The Nation indicated that the NSE has already marked 81 out of the 322 stockbroking firms on its dealing members’ list as inactive, a classification that exposed them to the risk of being delisted under a new rule being considered by the NSE.

    Stockbrokers earn barely 4.0 per cent as total brokerage on complete buy and sale stockbroking transaction. Although several stockbrokers are registered for other functions such as corporate finance and investment advisory, they face strong competition from banks, insurance and other financial services companies which provide similar functions.

    The precarious position of the larger number of stockbroking firms is compounded by the heavily skewed transaction pattern at the stock market, where less than 20 firms account for more than two-thirds of trades at the NSE.

  • New CBN policy may spur new fund raising as banks readjust capital

    A recent directive on exclusion of non-distributive regulatory reserve and other reserves in the computation of the capital base of banks and discount houses could quicken the pace of fund raising by banks and other financial institutions.

    Many banks have been raising funds in recent period. Diamond Bank is currently raising N50.4 billion new equity funds. Unity Bank had recently closed application list for a combined new equity issue of N39 billion. Wema Bank and Sterling Bank had earlier raised new equity funds.

    The Central Bank of Nigeria (CBN) last week in a circular to all banks and discount houses highlighted details on the exclusion of non-distributable regulatory reserves and other reserves in the computation of regulatory capital of banks and discount houses.

    The highlights of the circular indicated that the regulatory risk reserve will be excluded from the regulatory capital when computing the  Capital Adequacy Ratio (CAR), collective impairment on loans and receivables and other financial assets will henceforth not form part of Tier-2 capital, other comprehensive income reserves will be recognised as part of Tier-2 capital but limited to 33.3 per cent of total Tier-1 capital and while unaudited other comprehensive income gains will not be recognised as part of capital, unaudited other comprehensive income will be deducted from total qualifying capital.

    The circular, which implementation started immediately, was part of efforts to ensure more prudent assessment of the regulatory capital of Nigerian banks and in line with global efforts aimed at raising the quality and loss absorbency of the capital base of banks.

    Capital market pundits said the new policy would significantly impact on the capital adequacy ratios of banks and might spur them to seek additional equity funds to bolster their capital base.

    Increased fund raising by banks, which represent the most active block in the capital market and control nearly one-fifth of total market capitalisation at the Nigerian Stock Exchange (NSE), is expected to enliven the primary market.

    Analysts at Afrinvest (West Africa) noted that the new policy would further exert pressure on the banks’ capital adequacy ratios in the third quarter of 2014, when the policy will be used in calculating third quarter earnings and financial statements.

    The capital adequacy ratios of tier 1 banks had declined to 20.0 per cent by the end of 2013 as against 23.3 per cent in 2012.

    Analysts pointed out that the regulatory risk reserves accommodates the difference between the allowance for impairment losses on loans and advances based on CBN’s prudential guidelines compared with the loss incurred model used in calculating impairment charges under International Financial Reporting Standards (IFRS).

    A review of the banks’ capital adequacy ratios (CAR) as at first half 2014 showed that Ecobank Transnational Incorporated (ETI) has the lowest CAR at 16.0 per cent, at par with the 16.0 per cent regulatory requirement for systemically important banks (SIBs). FBN Holdings has 17.6 per cent, slightly above the requirement for SIBs. Among tier 2 banks, Diamond Bank has the lowest CAR with 17.3 per cent, which underlined the strategic importance of the bank’s ongoing rights issue.

    “The recently introduced 33.3 per cent Tier-2 ceiling of total Tier-1 capital, places a restriction on some of the banks that intend to raise further Tier-2 capital in the second half of 2014, hence, they may be forced to explore the Tier-1 capital’s equity raise option,” Afrinvest stated.

    Analysts noted that the new policy would increase confidence of foreign banks in Nigerian banks, based on the stringent capital requirement, which is in tandem with global counterparts, noting that in the light of Nigerian banks’ exposure to the Eurobond market, the prospects of volatility or depreciation in foreign exchange can be significantly absorbed.

    The new CBN policy comes in the wake of impending implementation of the Basel II by the Nigerian financial services authorities. The Nation had recently reported that Nigerian banks might raise some N400 billion in the current capital raising phase to strengthen their capital base in view of the impending implementation of the Basel II.

    Basel II seeks to strengthen banks’ risk and capital management through three main areas, otherwise known as pillars. The first pillar deals with minimum capital requirements, the second pillar deals with supervisory review process while the third pillar deals with processes relating to market discipline. The pillars generally ensure that the greater the risk to which a bank is exposed, the greater the amount of capital and required supervisory framework.

    After initial delay, Nigeria has set October 31, 2014 as the cut-over date for the implementation of Basel II.

    Market sources had noted that while the average capital adequacy ratio in the Nigerian banking industry is currently high and most banks are above regulatory benchmark, banks might need to support their adequacy ratios, which are expected to fall after the cut-over.

    Several analysts’ reviews on the banking sector have outlined capital raising as a major theme for the Nigerian banking sector citing new regulations and emerging business opportunities.

  • SEC, stockbrokers, others seek middle course on capital requirements

    SEC, stockbrokers, others seek middle course on capital requirements

    The Securities and Exchange Commission (SEC), stockbroking firms and other stakeholders are reviewing the new capital requirements for capital market operators.

    SEC had introduced new capital requirements for all capital market functions with a deadline of December 31 for full compliance.

    President, Chartered Institute of Stockbrokers (CIS), Mr. Albert Okumagba, said stockbrokers and other stakeholders are engaging SEC on the new capital requirements with a view to finding a common ground that will be mutually beneficial to the interests of the regulators and the capital market operators.

    He said the engagement process could likely result in an announcement by the stakeholders by the end of the third quarter, three months to the deadline earlier set by SEC.

    “We believe it’s going to be a win-win resolution for the regulator and the operators,” Okumagba said.

    SEC had announced major increases in minimum capital requirements for capital market functions under a new minimum capital structure that is expected to take off by January 1, 2015.

    The apex capital market regulator increased minimum capital base for broker/dealer 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 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.

    While a source at SEC had insisted to The Nation that the board of SEC would stick to the December 31, 2014 deadline for the implementation of the new capital requirements for capital market operators, there has been a groundswell of opposition to the new capital requirements, which operators believe were aimed at indirectly reducing the number of operators.

    The source at SEC had insisted that the apex capital market regulator carefully weighed all the options before deciding on the new capital requirements and the deadline.

    According to the source, the Commission decided on the new capital requirements in the best interest of the capital market as poor capitalization was partly responsible for the recent recession and cases of malpractices in the market.

    “The downtrend in the past was due to laxity in the regulatory framework and operators’ malfeasance. Everyone has acclaimed the improvement in the regulatory environment, so when you strengthened the regulatory surveillance, you must have stronger operators with adequate capital and relevant competencies to ensure stable market growth,” the source said.

    The source noted that inadequate capital has been undermining market growth as operators have not been able to respond to market growth initiatives being promoted by the regulators. The source cited the example of infrastructure fund, which has not generated any strong interest among operators.

    Earlier, leading stockbroker and Chairman of Capital Bancorp, Mr Olutola Mobolurin, urged the Commission not to use arbitrary regulation to enforce consolidation noting that both the capital market regulators and operators should find a common ground to ensure a smooth consolidation process.

    Mobolurin, who also chairs the NASD Plc and Custodian and Allied Plc, said consolidation should not be artificially imposed by resort to mandatory statutory capital requirements as capital alone does not make an institution viable.

    According to him, capital can be adequate or not while over-capitalisation is just as bad as under-capitalisation.

    Capital market operators argued that the new capital requirement structure- which retained the previous trend of fixed capital base for a designated function, failed to sufficiently address the peculiarities of the various capital market functions.

    Stockbrokers under the auspices of Chartered Institute of Stockbrokers (CIS) and Association of Stockbroking Houses of Nigeria (ASHON) had stated that the new capital requirements did not reflect the underlying structures and feelings of the market.

     

  • Writers’ residency at World Book Capital

     

    Port Harcourt is  in its third month as the United Nations Educational Scientific and Cultural Organisation (UNESCO) World Book Capital.

    With a mind of fulfilling its mandate as the World Book Capital (WBC) expressed in the winning bid, it has kicked-off several projects, such as the Reading Tree and Book Clubs, the Walking Book and National Essay competition for students in primary, secondary and tertiary institutions across Port Harcourt and the country, the Port Harcourt World Book Capital project administrators have said.

    According to them, they have started a monthly Book-of-the-Month discussions and drama performance, Books in the Air, and Library Support programmes.

    Besides these, they say, the Port Harcourt Book Festival, the Port Harcourt Book Centre, new Public libraries and the Writers in Residence projects are soon to be unveiled.

    The Writers in Residence project will bring together 12 selected writers (published and unpublished) from all over Nigeria to reside in the city of Port Harcourt for three weeks. Throughout their stay, they are expected to exchange ideas and engage in intense training sessions that will be anchored by seasoned literary professionals. They are also expected to draw inspiration and ideas for new works based on the theme of the Port Harcourt World Book Capital 2014: Books Windows to our World of Possibilities, which would then be published in an anthology.

    The residency, the WBC administrators said, is expected to foster cooperation, unity and friendship among the writers thereby encouraging national integration and promote tourist activities in Rivers State. There would be Writers’ Workshops onScript writing and fiction with Mr Chris Ihidero and Chika Unigwe.

    “The objectives of the programme include inspiring a new generation of creative writers from all over Nigeria, showing the importance of intercultural communication and exchange in order to encourage creative collaboration, raising the profile of aspiring writers participating in the programme and enhancing the exchange of ideas, skills and experience amongst the participating writers.”

    They have announced a call for interested participants who wish to part of the residency programme. “The application is open to emerging writers from all parts of Nigeria with interests in fiction and creative non-fiction. To participate, writers must be Nigerian citizens or permanent residents of Nigeria, be at least 21 years old and possess a portfolio of good quality written material.”

    Applications for the Writers in Residence programme is expected to include a statement of what the writer hopes to achieve during the residency, a detailed curriculum vitae and a 1200-1500 words excerpt from a published or unpublished work. Application forms can be downloaded from the website below:

    www.portharcourtworldbookcapital.org<http://www.portharcourtworldbookcapital.org.

    Entries should be submitted electronically to wir@portharcourtworldbookcapital.org not later than Friday, August 22. “All enquiries should be addressed to the Writers in Residence Programme Coordinator via wir@portharcourtworldbookcapital.org  or via telephone on 08023187731.

     

     

     

     

     

     

     

  • ‘Befitting capital city underway for Imo’

    Imo State  has restated its resolve to give a befitting capital city to the people.

    Governor Rochas Okorocha said over 60 per cent of government’s capital projects are sited within the Owerri territory to achieve this objective.

    Okorocha, according to a statement by Unadike Williams on behalf of his Senior Special Adviser (Media), stated this while inspecting the ongoing construction of drainage within the Works Layout and Amakohia areas of the state capital.

    The governor, who said erosion had remained a major challenge in the areas, pointed out that a number of houses are threatened following several years of neglect and lack of attention by previous administrations.

    He said his administration had embarked on construction of drainage within the Works Layout, through Imo State University to Amakohia, which will be channelled to the Nworie River.

    Okorocha added that the measure would bring a permanent solution to erosion problem in the area.

    He urged the contractor to hasten up the job in order to ensure its completion before December.

    He stressed that his administration has made remarkable achievements in the infrastructural development of the state capital in order to position it as a tourist haven.

    He also disclosed plans for the creation of a new city road network to help improve traffic situation.

  • AWKA: A capital city in race to catch up with others

    AWKA: A capital city in race to catch up with others

    Before the present Anambra State was carved out from the old one by the Ibrahim Badamosi Babangida administration in 1991, Awka, the capital city, compared favourably with Okigwe and Orlu, two communities in Imo State. But while the two Imo communities have experienced massive transformation into cities as a result of the infrastructural developments they have witnessed from different administrations in the state, Awka which was made the capital of the new Anambra State 23 years ago remains more like a rural community.

    Awka, the capital of a state that prides itself as the light of the nation, is still yearning for development more than two decades after. The city, located in the heart of Igboland, boasts a population of more than half a million people. Strategically, it is located midway between two major Igbo cities of Onitsha and Enugu with a temperature that hovers between 30 and 32 degrees Celsius.

    The town is reputed as the home to blacksmiths who are mostly responsible for the crafting of Dane guns hoes, cutlasses and other implements that make agriculture to thrive in Igboland. In time past, Awka was made up of many sub-communities. Today, they have all blended into one and divided into Awka North and South local government areas.

    However, it still preserves its traditional systems of governance with Ozo titled men often consulted for village and community issues, with a traditional ruler, Eze-Uzu, as the helmsman. One good feature of Awka is its accommodating spirit for visitors. Residents, however, do not compromise on business deals, particularly when they concern rent. An indigene of the town and State Coordinator of Transform Nigeria Movement (TNM), Comrade Obi Ochije, attributed this to the high cost of building materials in the area.

    Ochije wants the state government to begin construction of low cost houses in the city for workers to enjoy reduced rent in the area. He recalled that the city was regarded as “home for all” in the good old days because of its accommodating nature. Furthermore, he wants the state government to dualise the narrow Dike Street in the city for easy flow of traffic.

    Awka has 33 major villages and attracts people from other states. It has a significant number of immigrants from Northern Nigeria and the West. It was during the administration of former Governor Chinwoke Mbadinuju that the town, which hitherto was concentrated in a particular area, began to extend towards the popular Aroma and Government House, among others.

    Accommodation for government workers and business people has been a major problem in the city with a legion of people competing for few houses. The administrations of Mbadinuju and former Governor Chris Ngige made possible the construction of a few estates, including Ngozika on the Onitsha-Enugu Expressway. Others estates in the city include Iyiagu, located behind government house; Udoka; Ahocol Phase 1; Rockland and Abuja , all situated along the Onitsha-Enugu Express way. There are also the Isiagu 1, 000 housing units located along Agu-Awka and Esther Obiakor Housing Estate.

    Some of the estates were developed during the administration of Peter Obi, who failed to provide accommodation for workers in the state; an oversight Governor Willie Obiano seeks to correct by delving into the construction of same to appease the workers.  Obiano is also determined to open up the capital city with the construction of three flyovers from Amawbia to Amasea communities.

    The city has two major marketsEke-Awka and Amenyiwhere the inhabitants buy the different goods they need on a daily basis. Interestingly, the city, though not as large as other cities, does not have any amusement centre or playground. Residents make use of school playgrounds and some private keep fit centers to keep fit.

    The thriving businesses in the city are cyber cafes and restaurants, which are found in every nook and cranny. Workers and business people sit at different joints to while away time, while some of them drink themselves to stupor each day.

    The location of higher institutions in the state, especially in Awka, has made the town livelier with students from Federal Polytechnic, Oko; Nnamdi Azikiwe University and Anambra State University storming the city in search of greener pastures. Other students from Nwafor Orizu College of Education, Nsugbe and Paul University in Awka also throng the city in search of fun.

    The influx of politicians to the city has also caused supermarkets, pharmacy and gift shops to thrive in the town.

    However, night life is almost zero because of criminal activities which have held the state hostage in recent years. This is unlike Lagos, Enugu and other major cities where life is in full throttle for most part of the night.

    Happily Governor Willie Obiano has vowed to make the state uncomfortable for criminals, by inaugurating Operation Nkpochapu with a joint taskforce comprising the military, the police and other para-military outfits, to flush out hoodlums from the state

    There are some major eateries in the city where businessmen, students and politicians wine and dine with their better halves or friends. The eateries include Macdons, Trillers, Be-joy, Crunchies, Chuckies, Pallx, Mr. Bigs and Tetrazzini, among others.

    There are also big hotels that attract visitors from Asaba in Delta State, Enugu, Imo and other surrounding states. They include Geogold Hotels, Finotel, Crescent Spring and J’Burg Hotels.  Others are Barn Hill, Irish Gardens, Palos Verdes, Queens Suites Parkonia, Golffin, Old English, Stanford Bridge, White view, Hotel Lamitel, de-Limit, Cheleku, Sun-city, Tracy, Choice, the Benjamins and King David.

    Despite its small nature, the city lacks good road network, which has been a major cause of friction between the residents and past and present governments.

    Former governor, Peter Obi, is only credited with the construction of a pedestrian bridge at the Nnamdi Azikiwe Junction. Even the contract for the bridge was said to have been awarded by the Ngige administration, which Obi initially abandoned because of the cost.

    During a visit to the city last week, Dr Aminu Ahmed of the All Progressives Congress (APC) said he was disappointed with the level of development in the city. Ahmed said the impression he had of the city in the media was different from what he saw during his visit.

    But the people are hopeful that the city would get a facelift under the leadership of Chief Willie Obiano. Obiano has planned to begin massive infrastructural development in Awka with roads as his major attention, including the ones abandoned by Obi

    If well planned by the government, Awka would be a beauty to behold. But for now, there is little cause for cheer.

  • Quoted firms, capital market operators get deadlines on complaints’ resolution

    Quoted companies and capital market operators must compulsorily set up complaint resolution framework and address complaints from investors and other parties within a specified timeline, according to  new rules being considered by the Securities and Exchange Commission (SEC).

    A draft of the new rules on complaints management in the capital market obtained by The Nation mandates all capital market institutions including SEC, Nigerian Stock Exchange (NSE), quoted companies, Chartered Institute of Stockbrokers (CIS), capital market trade groups, stockbrokers and 1other operators to establish complaints management policies for the handling of various complaints.

    A source at SEC said the new rules were part of efforts to protect investors and enhance market’s integrity.

    The source noted that the new rules would complement other initiatives such as the Investors’ Protection Fund and ensure that the Nigerian market operates on the global best practices.

    According to the draft, all capital market operators and listed public companies shall be required to establish a clearly defined complaints management policy to handle and resolve complaints including complaints against operators by clients or other operators, shareholders and public companies and shareholders or investors.

    All capital market operators must resolve complaints against them within 10 working days from the date that the complaint was received while they have two working days to notify the relevant authority of the resolution of the complaint.

    Also, all the operators and quoted companies would have two working days to acknowledge receipt of complaints received by email and five working days to respond to complaints received by post.

    Where the complaint is not resolved within the given timeframe, the complainant or company will refer the complaint to the relevant competent authority within two working days with the letter of referral detailing proceedings of events leading to the referral and copies of relevant supporting documents.

    Also, all complaints lodged at first instance with the relevant competent authority would be resolved within 20 working days while the outcome of all complaints that are not resolved shall be referred to SEC 20 working days.

    The new rules make it mandatory for complaint policy by each quoted company and operator, which shall be defined and endorsed by the company’s senior management.

    According to the rules, the management of the companies would be held responsible for its implementation and for monitoring compliance.

    Besides, all capital market operators and quoted companies are required to have a complaint register, which will include details of all complaints. The companies are expected to provide the summary of the complaint register including the number of complaints to SEC.

    The new rules also empowered SEC to refer all prima facie case of criminal market abuses to the appropriate criminal agency for prosecution.

    However, companies and operators are exempted from addressing any complaints bordering on allegations without supporting documents, suggestions or seeking guidance or explanation, explanation for non-trading of shares or illiquidity of shares, trading price of the shares of the companies, non-listing of shares of private offers of securities by private companies and disputes arising out of private agreement with companies or intermediaries.

  • Capital market regulators issue guidelines on online trading

    Capital market regulators issue guidelines on online trading

    Securities regulators have designed guidelines for the growing number of retail online stockbroking portals that allow investors to execute their own orders on the Nigerian Stock Exchange (NSE).

    A reliable source said the regulators have raised a team to review the retail online stockbroking portals and develop a robust regulatory framework that could aid the growth of the segment and protect the investors and the market from abuses.

    The regulatory framework is expected to provide clear rules and guidelines for stockbroking firms and users of the online trading portals.

    There are no specific rules and guidelines for the online trading portals, which have emerged with the launching of the NSE’s new multi-faceted trading engine in 2013.

    At least four stockbroking firms have launched online retail stockbroking portals. These included Meristem Securities Limited, Lead Capital Plc, Morgan Capital Group and Capital Bancorp Plc.

    The regulatory framework, according to sources, would seek to protect the market and investors from the main risk of identity theft while allowing enough flexibility that could stimulate the growth of the online trading.

    NSE’s new trading engine, X-GEN, became fully operational in 2013. A dynamic platform that has numerous opportunities and capabilities, it is able to process some 100 million orders per day with 5,000 trades per second. It has a highly flexible and configurable market structure that can be enhanced to support the auctioning process and trading of several asset classes including Treasury Bills, a wide range of Fixed Income securities (including FGN Bonds), Equities, Exchange Traded Funds, Commodities and Derivatives.

    Based on NASDAQ OMX’s proven X-Stream technology, the X-Gen allows investors, through their stockbrokers, to have real-time access to market prices and their portfolios and provide them with ability to execute market orders in near real-time on a wide range of devices including smart phones and laptops from any location.

    Capital Bancorp is billed to formally launch its online stockbroking portal, Bancorp e-Trade, tomorrow. Bancorp e-Trade enables retail investors with as low as N1,000 to open stockbroking accounts and trade on these accounts.

    Managing Director, Capital Bancorp Plc, Mr. Higo Aigboje, said the portal will provide investors with round-the-clock access to their portfolio and cash statements while investors can also place their orders within and outside the trading hours of the NSE.

    According to him, Bancorp e-Trade is designed as a convenient and transparent means to ensure investors are in control of their investments at any time.

    To be eligible to trade on the portal, one needs only access to internet, a functioning e-mail address, any active bank account, a fair understanding of the workings of the stock market and a stockbroking account with Capital Bancorp.

    He outlined that his firm has simplified the account opening process for new investors as they only need to fill account opening form and upload scanned passport photo, scanned utility bill that is not later than three months, scanned specimen signature, scanned mode of identification and their bank details.

    The features of Bancorp e-Trade, which sits on the infoware e-business suite platform, included display of balance in any currency of choice, online mandate, ability to specify expiry dates on orders, display of portfolio balance and portfolio analysis, statement of account, ability to view and download contract note in different formats, ability to view certificates and verification status, live streaming of stock market prices, live portfolio valuation, amendments or cancellation to undone transactions, graphs and charts and online real-time client information.

  • New pension act to boost capital market,say experts

    The new Pension Act, which was recently signed into law by President Goodluck Jonathan, could lead to further inflow of funds and help to deepen the liquidity of the Nigerian capital market.

    Investment experts told The Nation that although the new Pension Act does not include any direct provisions that may have immediate impact on the capital market, many changes in the Act would indirectly impact the market.

    Head, Research and Intelligence, BGL Group, Mr, Femi Ademola, said the changes in regulatory powers of National Pension Commission (Pencom) and enforcements would quicken the pension pool.

    According to him, the new pension act contains changes to regulatory powers of the Pencom especially in terms of compliance to the mandatory retirement savings while it also seeks to increase pension contribution by expanding covered persons, especially to the informal sector. All these developments will definitely help to grow pension assets in the coming years.

    He noted that while investment allocations by the pension fund administrators (PFAs) would still be governed by the periodic regulatory guidelines from pencom, which restrict investments in equities, the increase in pension assets would lead to larger investments in the capital market.

    “As the pension assets increases, the amount of assets to invest in equities, corporates and other non-sovereign securities could increase. The increase in pension assets may also result in the altering of permissible investments by the regulator which may eventually favour the capital market,” Ademola said.

    Group head, research, Lead Capital Plc, Mr. Sadiq Waziri, pointed out that the increase of total contribution from 15 per cent to 18 per cent would accelerate pension assets that can be created by PFAs noting that pension assets, which currently stands at more than N4 trillion, could have a 20 per cent boost in it growth.

    “Since PFAs can invest in equities, it would simply mean more funds will be available to them to invest in various asset class including equities. It would add more liquidity to the market,” Waziri said.

    Meanwhile, many capital market operators had called for more flexible investment guidelines that would allow PFAs to aggressively grow their funds and finance creative financial solutions without necessarily undermining their assets.

    Group deputy managing director, BGL Plc, Mr. Chibundu Edozie, noted that capital market operators and investment managers would like to see a pension sector that is creative and more amenable to more exotic assets to meet the market’s needs.

    According to him, while the guarded approach by Pencom saved the industry from the market meltdown of 2008-2010, the industry is ripe now to start allowing more innovation and skilful management expertise from the fund managers.

    “We may start this by allowing investment according to the demography of beneficiaries where funds with more young contributors are allowed more investment in equities than funds with older contributors. We may also allow fund managers to invest in some private products such as infrastructure funds and other development-focused products and funds which may not fulfill all the current investment guidelines by the Pencom as long as the fund manager is convinced that it is a beneficial investment to the fund contributors,” Edozie said.

    Managing director, Capital Assets Limited, Mr. Ariyo Olushekun, also noted that there should be flexible in pension fund investment and management in line with the structures and classes of the contributors.

    According to him, increased pool of capital and flexible investment rules should allow aggressive fund managers to play in the equities market without violating any rule.

    He noted that pension funds as collective assets of the Nigerian people should be used as catalyst for the Nigerian capital market, which would in turn impact on the nation’s economic development.

  • Mixed reactions trail release of N200b capital votes

    Mixed reactions trail release of N200b capital votes

    The Federal Government’s re lease of N200 billion capital votes has attracted mixed reactions.

    Port Consultative Council (PCC) Chairman Chief Kunle Folarin said the delay in the release of capital votes would adversely affect capital projects.

    “We all know the challenges of building funds in Nigeria today, our release from oil and gas, Customs and other areas of fund generation have been affected,” he said.

    The immediate past President, Association of Stock Broking Houses of Nigeria (ASHON), Alhaji Rasheed Yusuf, agrees with Folarin, noting that the release of the capital votes, coming towards the end of the first half of the year, was unhealthy for the economy. He said that the delay in the release of the funds would adversely affect the execution of projects earmarked for completion in the second quarter.

    He also said the delayed release could cause inflationary pressures if used for the payment of salaries of workers in Ministries, Departments and Agencies (MDAs).

    Similarly, the Chairman, Nigerian Institute of Building (NIOB), Lagos Chapter, Mr. Asimiyu Bashir, lauded the Federal Government for the release of the fund. He said it would increase liquidity in the economy and engender confidence in the nation’s polity. Same for the former Director of the Central Bank of Nigeria (CBN), Mr. Chris Nemedia, who said the release of the capital votes in June was still in good time. He urged the Federal Government to allocate the funds solely for the implementation of government projects earmarked for the year.

    However, for the Executive Secretary, Nigerian Association of Small Scale Enterprises (NASME), Mr. Eke Ubiji, the time the fund was released was not as important as how it would be utilised. He urged the Federal Government to pay attention to the implementation of the projects outlined for the second quarter.

    He also urged the government

    to build durable infrastructure, including electricity, which had notbeen in favour of business ventures in the country.