Securities and Exchange Commission, SEC, is implementing a Master Plan to reform the Capital Market
Issues militating against the development of the Nigerian bourse will be addressed through the implementation of the Master Plan launched by the Securities and Exchange Commission, SEC, as a tool for achieving market reform.
SEC last Thursday inaugurated an Implementation Committee for the 10-year Capital Market Master Plan created to ensure that the capital market play its role in aligning with the nation’s economic vision.
The apex capital market regulator embarked on the reform to achieve the vision of the nation’s bourse becoming “Africa’s most modern, efficient and internationally competitive capital market that catalyzes Nigeria’s emergence as a top 20 global economy”.
A pre-implementation team had identified and classified the issues under four main transformation themes, namely, contribution to national economy, market structure, competitiveness and regulation/ oversight.
A fallout of the exercise is the need to address the concerns of retail investors who has suffered tremendous set-back in the capital market, especially since the financial crisis of 2008 that almost collapsed the nation’s bourse.
The Director-General of SEC, Mounir Gwarzo, has said that the Commission is taking the necessary measures towards addressing the concerns of the retail investors who he believes will return to the capital market once their concerns are properly addressed.
Speaking at a workshop organized by the Capital Market Correspondents Association of Nigeria (CAMCAN) in Lagos at the weekend, Gwarzo disclosed that the Commission would address the retail investors’ concerns before attracting them to the market again. “We want to address concerns of retail investors before we start wooing them into the market.” he said.
According to him, the Commission has inaugurated the board of Investors Protection Fund (IPF) and from next year, proceeds of shares sale will be paid directly into the account of investors as part of efforts to address the investor concerns.
Gwarzo also commented on the dematerialization programme to enhance market efficiency and ensure effective participation by investors and operators. He reiterated that dematerialisation is very important to the growth of the market, hinting that by 2016 more shares would be dematerialised.
Also speaking, the Chief Executive Officer of the Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, who spoke on the workshop theme, “Effective Reporting of Changes in the Nigerian Capital Market,” said retail investors need to be educated on why they should take portfolio approach to investment.
He said, “It is important to do the analysis, understand where those opportunities are but certainly there are opportunities, not only in the equity side but across the various asset classes. We always advise investors to diversify their portfolios across different assets classes to mitigate risks.”
Onyema also commented on the suggestion that unlisted companies be “forced” to join the market as a way of growing the bourse. He argued that good corporate governance will ensure solid companies and stressed that forcing companies to list on the Exchange might be counter-productive.
He warned that such action might lead to infractions in the market, saying that a lot of energy has been spent building the foundational aspect of the market in terms of transparency, orderliness, fairness, disclosure, and more importantly how enforcement of rules and regulations.
“In the short term, you will see the huge volatility but that should not distract from those fundamental elements about good companies, making good money, running under a well governed Exchange structure and a well regulated market structure. These factors will combine to shore up investors’ confidence in these challenging times.
“As we continue to work towards achieving and sustaining this market, the importance of your role cannot be over emphasized. Financial journalists have the potential to influence investors’ behaviour. Negative reporting may result in sensationalism and put additional pressures that can force investors’ decisions negatively,” he added.
Earlier, the President of CAMCAN, Mr. Goddy Egene, had commended the regulators for attending the workshop, saying that in the last two years, a lot of changes have occurred in the market and there is need for cooperation of stakeholders for the progress of the market.
Presentations were made by the two non-equity trading platforms, FMDQ OTC Securities Exchange and the NASD Plc, both SEC-registered Over-the-Counter markets in Nigeria.
– Sam Diala