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Tag: Stock Exchange

  • Stock Exchange steps up demutualisation process

    The Nigerian Stock Exchange (NSE) has begun the implementation of key action plans in its bid to convert from a member-owned mutual organisation to shareholder-owned public limited liability company, otherwise known as demutualisation.

    Executive director, market operations, Nigerian Stock Exchange (NSE), Mr. Ade Bajomo, who provided updates on the demutualisation process, said the council and management of the Exchange have made significant progress in the implementation of the demutualisation process.

    Bajomo said the professional advisers and parties to the demutualisation would soon be announced, a step that is expected to further quicken the pace of the conversion.

    He reiterated the commitment of the Exchange to ensuring that the interests of all the stakeholders are protected in the demutualisation exercise.

    Bajomo spoke as the director general of the Securities and Exchange Commission (SEC), Mr Mounir Gwarzo reassured that the apex capital market regulator would support the demutualisation of the Exchange.

    “At SEC we have come up with very robust rules on demutualization and we had a lot of engagements with the market in coming up with those rules. It is now at the doorsteps of NSE. We have told them that any assistance they want in terms of advocacy we are ready to assist them,” Gwarzo said.

    Demutualisation is the process of changing a member-owned stock exchange, otherwise known as mutual exchange, to a corporate entity owned by shareholders. In a mutual exchange, the three functions of ownership, management and trading are concentrated into a single group, hence the broker members of the exchange are both the owners and the traders on the exchange and they further manage the exchange as well.

    In a demutualised exchange, the three functions of ownership, management and trading are clearly separated.

    The approved rules by SEC simply defined demutualisation as “the process through which a member owned organisation becomes a shareholder owned company”. The demutualisation framework approved by SEC stresses that the process of demutualization of the Securities Exchange should include an exchange of membership rights in the Securities Exchange for ownership of shares in the demutualised Securities Exchange.

    According to the framework, stockbrokers, who constitute the largest members of the NSE, may have to sell down their shareholdings within a period of five year in the demutualised Exchange.

    The final rules approved by SEC indicated that the aggregate equity interests of members of any specific stakeholder group such as stockbrokers and broker-dealer in the demutualised securities exchange should not exceed 20 per cent.

    The rules also retained the provision that no individual or entity must directly or in directly own more than five per cent of the issued shares or voting rights in a demutualised securities exchange.

    The rules, made pursuant to section 313 of the Investments and Securities Act (ISA) 2007, describe “related entities and persons” as a person or entity that is related to the entity or person that owns the equity or the voting rights.

    The rules stipulate that the securities exchange should initiate a process for determining the accurate list of members of the Exchange prior to the commencement of demutualisation.

    “The stakeholder groups who are shareholders of the Securities Exchange shall with effect from the date of demutualization shall reduce their cumulative shareholding in the demutualized Securities Exchange to no more  than 20 percent within five years”, according to the rules. The 20 per cent ceiling is however an improvement on the draft rules, which stipulated a ceiling of 10 per cent within five years.

    The rules allow the Exchange to give equity interest to a strategic investor subject to establishment of the facts that the strategic investor has technical expertise through previous experience in managing other Exchanges and the aggregate number of shares to be offered to the strategic investors shall not be more than 30 per cent of issued and fully paid up capital of the securities exchange.

    However, if the Exchange is in dire need of funds, it could issue a higher number of shares subject to approval of the Commission.

    As part of preconditions for demutualisation, a securities exchange shall prior to demutualization submit the names and profiles of members of its committee on demutualisation, a valuation report, the draft Memorandum and Articles of Association of the Securities Exchange, the proposed rules of the demutualized Securities Exchange, the proposed allotment and the basis of the proposed allotment of shares to the initial shareholders of the  Securities Exchange, a list of the directors proposed as the Board of the Securities Exchange, an implementation plan stating the process to be adopted for effecting the demutualisation of the Exchange, including but not limited to the treatment of the rights and liabilities of the existing members of the Exchange and the proposed plan for the independent management of the commercial and regulatory functions of the demutualized Securities Exchange and timelines for implementation of necessary structures to ensure the functional treatment of commercial and regulatory functions for a “No Objection” clearance by SEC. Any changes to the information provided under the preconditions must also be filed with the Commission for a “No Objection” clearance.

  • ‘Lotto is stock exchange of common man’

    ‘Lotto is stock exchange of common man’

    Chief Kessington Adebutu, the founder and Chief Executive Officer  of Premier  Lotto Limited (PPL), also known as Baba Ijebu  has admonished youths not to be in a  haste; they should first learn to crawl before walking.

    The billionaire pool magnet gave the admonition when members of the Youth Advancement for Qualitative Education Africa (YAQE), a non-profit organisation, visited his office to present him an award in recognition of his philanthropic activities and support for young people.

    The philanthropist who would be clocking 80 in some months told the youth that the secret behind his look at the age of 79 is that he does things in moderation.

    Asked how he was able to rise from nothing to a multi-billionaire, he said; “It is God’s grace, that is why our office reception is full of people. I should appreciate God. That is why I give back to the society and the less privileged. God has done wonders in my life. Some people work harder than I do. At my age, I should be living on my reserve but I thank God that at my age I am still making money. I am very grateful to God, I don’t hide it”.

    Responding to question on the succession plan he has in place for his business, Chief Adebutu affirmed that the plan is perfected and sealed.

    “I have my six children working with me here. Whether I am around or not, they are working. I came back from a trip on the July 1st and I am going back again on holiday but the business goes on. So my succession plan is perfect”.

    Reacting to the influence of lottery business on the society since some people have their reservations about the game, Chief Adebutu said the influence of the game on the society is enormous.  “People have reservations, they are getting it wrong. I continually say that lotto is the stock exchange of the common man on the street.  Shares crash at times, but when you game, you can win, you can lose”.

    “It gives the common man hope and that stops them from any nonsense because they are still working. You can see this Ojuelegba area, there were ruffians all over the place, we have taken them all out of the street because they have hope”, he submitted.

    Pledging his support for the advancement of young people, the philanthropist said he is motivated because he feels good about his business.

     

  • Osun Osogbo Festival for stock exchange

    Osun Osogbo Festival for stock exchange

    The Osun Osogbo Festival, Nigeria foremost cultural tourism event, will be heading for the stock exchange. This was disclosed by the marketing consultant of the festival and Managing Director of Infogem Limited, Mr. Ayo Olumoko, during the unveiling of this year’s Osun Osogbo Festival.

    Olumoko said the festival, having been consistent as Nigeria’s foremost tourism event and  a big attraction to both local and foreign interests, the organizers want to move the festival to the next level by seeking its listing on the Nigerian Stock Exchange.

    At the corporate sponsors’ unveiling,  the date  for the grand finale of the festival has been slated for August 21. However, sixteen days to the grand finale, the traditional rite will commence with the Iwapopo, the traditional cleansing of the town which begins the countdown to the grand finale.

    Other events that would hold before the grand finale include the lighting of the sixteen point lamp and the assemblage of the past crowns of the former kings of Osogbo.

    Among the corporate sponsors for this year’s event include telecommunication giant, MTN; Nigerian Breweries, using one of the company’s beer brands, Goldberg; Grand Oak Limited, brewers of  Seaman’s Aromatic Schnapps; Kasapreko Limited, producers of Alomo Bitters and many others.

  • London Stock Exchange in talks to operate Plato venue

    A nascent consortium of asset managers, banks and brokerages is in talks with a London Stock Exchange Group (LSEG) (LSE.L) unit to provide technology for its planned trading platform, conceived as a venue for off-market trading of large blocks of shares.

    Plato Partnership said it was in exclusive discussions on a commercial collaboration with LSEG’s majority owned Turquoise unit, which already operates a so-called “dark pool” venue for large block trades.

    Plato, whose members include Citigroup (C.N), Goldman Sachs (GS.N), Deutsche Bank (DBKGn.DE) and asset managers like AXA Investment Managers (AXAF.PA) and Franklin Templeton, plans a dark pool or anonymous trading venue linking its members and other institutions, with profits ploughed back into academic studies to make its platform more efficient.

    Dark pools, whose transactions are only revealed once they are completed to avoid unduly moving prices, have come under scrutiny from regulators who want more transparency in trading.

    The European Union (EU) is finalising curbs on the volume of dark pool trading in shares from 2017. However, many fund managers are unwilling to give up anonymous trading of big blocks as it helps limit adverse price moves.

    Exchanges and trading platforms including Turquoise have already announced measures to accommodate incoming EU rules while retaining some features of dark-pool trading.

    The aim of the LSEG-Plato agreement is to outsource operations of the trading venue, Deutsche Bank’s Stephen McGoldrick, project director for Plato, said in an interview. He declined to comment on specifics of the talks but said that the exclusive talks would hopefully only last a few weeks.

    Turquoise is 51 percent owned by LSEG, with 12 banks owning the rest.

  • ‘Lotto is stock exchange of common man’

    ‘Lotto is stock exchange of common man’

    Chief Kessington Adebutu, the founder and Chief Executive Officer  of Premier  Lotto Limited (PPL), also known as Baba Ijebu  has admonished youths not to be in a  haste; they should first learn to crawl before walking.

    The billionaire pool magnet gave the admonition when members of the Youth Advancement for Qualitative Education Africa (YAQE), a non-profit organisation, visited his office to present him an award in recognition of his philanthropic activities and support for young people.

    The philanthropist who would be clocking 80 in some months told the youth that the secret behind his look at the age of 79 is that he does things in moderation.

    Asked how he was able to rise from nothing to a multi-billionaire, he said; “It is God’s grace, that is why our office reception is full of people. I should appreciate God. That is why I give back to the society and the less privileged. God has done wonders in my life. Some people work harder than I do. At my age, I should be living on my reserve but I thank God that at my age I am still making money. I am very grateful to God, I don’t hide it”.

    Responding to question on the succession plan he has in place for his business, Chief Adebutu affirmed that the plan is perfected and sealed.

    “I have my six children working with me here. Whether I am around or not, they are working. I came back from a trip on the July 1st and I am going back again on holiday but the business goes on. So my succession plan is perfect”.

    Reacting to the influence of lottery business on the society since some people have their reservations about the game, Chief Adebutu said the influence of the game on the society is enormous.  “People have reservations, they are getting it wrong. I continually say that lotto is the stock exchange of the common man on the street.  Shares crash at times, but when you game, you can win, you can lose”.

    “It gives the common man hope and that stops them from any nonsense because they are still working. You can see this Ojuelegba area, there were ruffians all over the place, we have taken them all out of the street because they have hope”, he submitted.

    Pledging his support for the advancement of young people, the philanthropist said he is motivated because he feels good about his business.

     

  • Stock Exchange opens marketplace for sub-brokers

    The Nigerian Stock Exchange (NSE) on Monday started the implementation of a new rule that introduces sub-brokers as market operators at the Nigerian capital market. The new rule on sub-brokers was approved by the Securities and Exchange Commission on June 2, 2015.

    The rule on sub-brokers, otherwise known as investment agents, allows individual registered stockbrokers and professional members of the Chartered Institute of Stockbrokers (CIS) and non-stockbrokers first degree holders to set up their private firms and deal as investment agents as corporate entities and individuals in the marketplace.

    Head, broker dealer regulation, Nigerian Stock Exchange (NSE), Mr. Olufemi Shobanjo, in an emailed response to The Nation, said the sub-broker framework was developed with a view to enhancing financial inclusion by attracting new entrants to the capital market particularly those based in remote, rural or semi-urban areas where investors are more likely to be less sophisticated and may not have access to modern technology infrastructure.

    “It is also to discourage illegal capital market operators from taking undue advantage of investors and to create an enabling environment for micro-operators to participate in the capital market in a regulated manner,” Shobanjo said.

    He pointed out that the minimum capital requirements for sub-brokers are N1 million for corporate sub-broker and N500,000 for individual sub-broker, as specified in section 67 of the SEC’s Rules and Regulations 2013.

    A sub-broker is expected to act on behalf of a dealing member as its agent for assisting investors in buying, selling or dealing in securities through such dealing member.

    To be eligible as sub-broker, the person or firm must be registered by SEC. Dealing members are also expected to execute agreements with each of their sub-brokers specifying the rights and responsibilities of the dealing members and sub-brokers as provided in the rules and regulations of the Commission.

    Any dealing member that wishes to transact business with a sub-broker shall submit an application for approval to the Exchange including a certified true copy of the Registration Letter of the sub-broker issued by SEC, a copy of the documents evidencing the qualifications of the sponsored individual(s) of the sub-broker, a completed standard form guarantee document completed by the dealing member, a copy of the agreement between the sub-broker and dealing member and any other documents that may be required by the Exchange.

    Stockbrokers are expected to ensure that where an individual is sponsored as a sub-broker, such sponsored individual shall be an associate member of the Chartered Institute of Stockbrokers (CIS) or a first degree holder in relevant fields as may from time to time be determined by the Exchange in line with the Rules and Regulations of SEC, with a minimum of five years post working experience excluding National Youth Service.

    It is also the responsibility of a stockbroking firm to ensure that the sub-broker complies with the Rules and Regulations Governing Dealing Members and all Capital Market rules and regulations, including the Know Your Customer requirements (KYC) while the stockbroker will also be responsible for the internal review of activities of the sub-broker in addition to ensuring that supervisory controls are put in place to monitor the activities of the sub-broker. The dealing member is expected to submit a quarterly report of its review in a form to be prescribed by the Exchange alongside the dealing member’s quarterly report.

  • Stock Exchange introduces pension index

    The Nigerian Stock Exchange (NSE) has introduced a pension index as part of efforts to deepen the market and encourage more participation by the pension fund operators.

    The NSE Pension Index includes the top 40 companies in terms of market capitalisation and liquidity. Adjusted market capitalisation of a listed company is the number of its listed shares, multiplied by the closing price of that company, multiplied by a capping factor..

    The index values, which would be available as from January 2, 2013 was exposed to the investing public at the weekend. The index has a base of 1000 as at December 31, 2012.

    According to the NSE, the creation of the NSE Pension Index will encourage the development of other products such as Exchange Traded Products (ETP’s) and Index Futures.

    The Index also provides a tracking mechanism for pension fund administrators (PFAs), custodian to the PFAs (CPFA) and others that follow the National Pension Commission (PENCOM) guidelines.

    The index is also expected to serve as a benchmark for measuring performance and reporting performance to RSA Holders.

    The stocks that formed the index were picked based on their market capitalization from the most liquid sectors in line with the pension reform guideline. Also companies to be included in the index must have free float factor of at least five per cent, making the index the first index on the NSE that gave consideration to free float.

    Also, companies that formed the index must have paid dividend or bonus at least once in the last five years.

    The NSE Pension Index is designed as a total return index so that it can accurately measure equity portfolio performances, which capture returns from dividends, price changes and realized gain.

    However, as a total return index, the pension index will only be available at the end of day as there would be no intra-day values.

    It should be recalled that the NSE and the MSCI Inc, a global provider of investment-decision support tools, had in March reached a strategic co-operation agreement to develop and market a co-branded family of indexes for the Nigerian equity markets.

    Under the terms of the agreement, existing and future indexes will be co-branded as the MSCI/NSE indexes. These indexes will include the existing NSE 30 Index and NSE 50 Index, which will become the MSCI/NSE 30 Index and the MSCI/NSE 50 Index respectively.

    Also, additional indexes will also be jointly developed and launched in the future based on client demand and market development. The indexes will be used as performance benchmarks and as the basis for index-linked products for investors seeking exposure to the Nigerian capital markets.

    The MSCI/NSE Indexes will be calculated and disseminated by MSCI, based on the same ind ustry leading standards that apply to the MSCI indexes. MSCI will commercialize the indexes outside of Nigeria while the NSE will continue to serve clients in Nigeria.

    MSCI Inc is a leading provider of investment decision support tools to investors globally, including asset managers, banks, hedge funds and pension funds. MSCI products and services include indexes, portfolio risk and performance analytics, and ESG data and research.

     

  • Stock exchange as ultimate voting machine (2)

    Investors purchase shares or securities of a company with the view that the company has strong future prospects. While making their investment decisions, Investors are typically concerned with a number of factors but the top two often considered by most are: value – investors consider whether a security represent good value and success –investors measure the future of a security (or company) by looking at its financial strength and evaluating its future cash flows. These factors can be determined through analysis of the company’s financial statements along with a look at industry trends that may define future growth prospects and the pedigree of its leadership. In the case of a sovereign security, investors would typically use the growth rate of the economy, unemployment figures, security, balance of payment, gross domestic product and level of budget deficit as indicators.

    The market voting process

    Accreditation begins in the morning, much similar to the ceremonial bell ringing or gong ringing as is the case at the NSE on the floor at 9:30am, heralding the pre-open session. Note also that the system opens a log on the point of login by the Stockbroker as every broker that has been validated to trade by the Exchange has a unique username and password. The log captures time of entry, volume, account numbers and automatically assigns ticket numbers to the matched trades. In addition, it also captures the time any order was amended, cancelled and edited and the name of the executor. This is to facilitate a comprehensive and independent market surveillance process and provide audit trails, for playing back market activities, in order to resolve disputes or provide evidence which may be required in the event of a market infraction to secure a disciplinary conviction.

    The order books are filled by the Stockbrokers in consonance with the mandates of the clients and queued on the system. A valid order must have the following features: Price, Volume and the client’s account number duly verified by the system. Voting (matching of orders) currently begin at 10:15am, immediately after the opening auction and the process continues until 2:30pm when the Closing Bell (or Closing Gong in our local setting) sounds, signaling the close of all trading activities for the day.

    For a trade to occur, the system establishes price equilibrium on both sides of the order i.e. the bid and offer. It generates a ticket number for that trade with a time stamp. Thus, the trade becomes valid. An SMS message from the Exchange’s notification infrastructure, known as X-Alert, is triggered into the mobile telephone handset of the investor, detailing sales or purchases made and specifying the volume and price of the transaction. In the event that the investor did not authorise the transaction, he can summarily abort the process by placing a call to the NSE. Reports are also released immediately at the end of the day as brokers communicate the day’s transactions to their clients.

    In Nigeria, aggrieved clients may seek for redress using the disciplinary process starting from the Nigerian Stock Exchange to the Securities and Exchange Commission (SEC) and the Investment and Securities Tribunal (IST).

    The Stockbrokers could be likened to the Electoral College; a group of professionals licensed by the Exchange and chosen by the people (investors) to vote for the candidate (securities) of their choice. The SEC (the Apex Regulator of the Nigerian Capital Market) and the Nigerian Stock Exchange are the umpires that watch and regulate the entire trading activities just like INEC. The contestants here are the Bears and the Bulls.

    Feeling bullish or bearish?

    A common colloquial expression in the market is the relation of market sentiments to bears and bulls. The thought of facing a raging bull or a grizzly bear sound all too dangerous  – and so are extreme market sentiments – but from a market perspective, a bullish market indicates that investors are confident about the outlook of the securities in the market and express this by increasing their trading activities. Prices consequently go up and so do the indices. A bearish market is the opposite, with lower confidence levels prevailing and prices falling. Technically, a bear market is defined as one where prices have declined by 20% or more over 20 consecutive trading sessions.

    The use of the terms “bull” and “bear” to describe markets came from the way the animals attack their opponents. A bull thrusts its horns up into the air while a bear swipes its paws down.

    The Automated Trading System serves as a polling station where mandates from investors are executed, while the Message Handling System serves as a window where market information, also known as Market Data and other relevant news items including financial reports, price sensitive information, forecasts and corporate actions are relayed to the market and investors in real time as it emanates from the companies and the wider market. The market reacts to information immediately as evidenced by their orders or mandates.  The driving force for various dynamics of price movement is basically the interpretation of these information released by investors. Information could lead to a change of voters’ position on the polling units, in the same way, investors react to news from companies. For instance, in a regulatory move in August 18, 2009, the Central Bank Governor sacked the top management of five banks in Nigeria. This news sent shivers down the spine of the investing community, resulting in panic sell offs. The price drop over a five month period for three of the banks and the All Share Index are represented below and the overall market became bearish for some time.

    Conversely, good corporate news emanating from companies could influence investors’ decisions over time. For instance, in July 5, 2012 Livestock feeds Plc was highly on offer (sale) during the pre-open session of the market. However, the order book changed during the continuous trading session when news hit the market that Livestock Feeds Plc notified The Exchange that it has signed a Memorandum of Understanding with UACN Plc, one of the listed blue-chip companies, on plans to make an equity investment in Livestock Feeds Plc.

  • Listing on stock exchange has helped us to grow, says Chams

    Listing on stock exchange has helped us to grow, says Chams

    The listing of Chams Plc on the Nigerian Stock Exchange (NSE) was one of the major decisions that helped to strengthen the up-start pioneer information and communication technology company into a veritable industry leader with strong corporate governance and stable growth.

    Sir Ademola Aladekomo, who founded Chams in 1985 and steered the company for almost 30 years as managing director, said the listing of the company enabled the directors to strengthen and adopt international best practices and good corporate governance structures, which proved to be of immense advantage to the company during its turbulent period. Aladekomo, who retires in September, spoke to The Nation in an exclusive farewell interview.

    According to him, one of the major advantages of listing is the standardized requirements for reporting operational results and accounts, which ensure greater level of transparency and commitments to organizational goals.

    “If you are not messing around with your books, if you do not have anything to hide, if you want to be very transparent,  if you want to be held on to your projections, your budgeting performance by the public, then you should list. For us in Chams we decided to be opened, more because we do not have anything to hide. We believe that it is by exposing ourselves, by letting the whole world knows what we are doing that we can improve,” Aladekomo said.

    He recalled that because of the listing requirements; in 2010, 2011 and even 2012 when things are really tough and bad and the company was declaring results that were like a disgrace, the board and management had to faithfully kept with quarterly reporting all through the period.

    He noted that the company standardised its accounts department and made it highly independent, such that officials of the company would not be able to tamper with the official records.

    “For us, being opened has really helped us. For one, our stakeholders can trust us knowing that we are not hiding any figure. It also makes corporate governance very easy for us. If we had been a private company during those periods of turbulence, if we didn’t publish our results, it would have been so easy, even the members of staff we won’t need to declare anything to them, everybody will just be wondering what is happening, the results would just be, may be, between the managing director, the chairman, a couple of board members and the head of finance. But companies have been known to die such way by keeping their secrets because most people won’t know what was happening. But for us, it is there in the public in the open; this is the reason you are not doing well, this is the reason you are going to get out of the problem, this infuses a lot of confidence,” Aladekomo said.

    He added that going public allowed the company to separate management from ownership, which enhanced the professionalism and independence of the company.

    “It looks a bit easy theoretically, but once you are able to separate management from ownership, your managers can now become professionals. Take for instance where you have the owner as the chairman and managing director, the person can come on Monday and demand for N10 million, of course nobody is going to know because your books are not published, even if the chief finance officer knows, that is her own headache. Before you know it, because the results are not publish, nobody is holding anybody accountable, because management and ownership are not separated, the owner has actually wrecked the company without even he himself knowing. But in a situation whereby you get listed, the owner knows these are his limitations, the managers know that if they do anything untoward, they will be held accountable and they may go to prison.” Aladekomo said.

    According to him, while theoretically the idea of separation of ownership and management may seem easy, it actually requires rigourous corporate governance and requirements to be able to achieve good corporate governance.

    “So, the advantage of just separating management from ownership is enormous.  We actually regretted in Chams that we didn’t do it 15 years earlier on because if we had done it earlier on, we would have been in much better place than we are now,” Aladekomo said.

    He assured shareholders that Chams has attained sustainable growth trajectory that will continue to improve in the years ahead noting that the new managing director will take the company to a greater height.

    According to him, the management team at Chams has been very well-trained and well-groomed to be able to run the company successfully and they have demonstrated that they will be able to do it.

    He said the company has also put in place a very good board that has a knowledgeable oversight of what is happening within the company and beyond.

    “We believe the future is very bright for the company. To the shareholders, I think they should also be very confident that the future is very bright and I think the company will do a thousand times better than it has ever done when I was there. Shareholders have nothing to worry about. I believe that in 2015, very good results will be declared and subsequent years, the results will be improved upon,” Aladekomo said.

  • Stock Exchange set for direct payment to investors

    Stock Exchange set for direct payment to investors

    The Nigerian stock market is set for a paradigm shift in its payment process, transaction cycle and costs of transactions as the Securities and Exchange Commission (SEC), the Nigerian Stock Exchange (NSE), the Central Securities and Clearing System (CSCS) Plc and other stakeholders finalise key initiatives that will redirect payment of sales’ proceeds to directly to investors’ accounts within a shorter timeframe.

    These were the highlights of the first quarter meeting of the Capital Market Committee (CMC) yesterday in Lagos. The CMC comprises of the all stakeholders in the capital market including SEC, the apex regulator, the NSE, a self-regulatory organisation and the only stock exchange; the CSCS, the depository and settlement agent for the stock market and all the trade groups and relevant public policy makers.

    Addressing financial journalists at the end of the meeting, acting director general, Securities and Exchange Commission (SEC), Mr. Mounir Gwarzo, said the CMC deliberated on key initiatives aimed at enhancing and deepening investors’ participation and confidence in the Nigerian market.

    According to him, one of these initiatives is the implementation of the direct payment of sales’ proceeds to investors’ accounts. This will represent a paradigm shift from the current process under which sales’ proceeds are credited to the stockbrokers’ accounts, who thereafter make payment to the investors.

    Under the direct payment system, investors will provide their bank accounts to the CSCS, the depository, alongside other stockbroking and investment account details, and the CSCS will directly credit the investors’ accounts once transactions are concluded.

    In another major boost, Gwarzo said the CMC was working on a proposal that will hopefully lead to reduction in the settlement cycle from the current “T+3” to “T+2” or “T+1”.

    Under the “T+3”, transactions carried out on the capital market is expected to be settled three days after the trade date. Reducing the cycle means that transactions will be settled faster.

    “One area that we also think will encourage investors greatly is the area of direct payment where if a client gives his shares to be sold, the proceeds of the sale would be credited into his account directly. So, he would have direct access to the funds. And, hopefully, our settlement system might be reduced from “T+3”, probably to “T+1” or “T+2,” Gwarzo said.

    He added that the CMC would at its next meeting, second quarter meeting, discussed a report by the sub-committee set up on reduction of transaction costs as part of efforts to encourage investors.