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By Dike Onwuamaeze
The Nigerian Stock Exchange (NSE), is shifting its management focus from market transformation to growth. This was the message of Oscar Onyema, chief executive officer, NSE, when he addressed the Capital Market Solicitors Association recently. “The transformation of the NSE which started in 2011 has been a remarkable journey, and it is with great pleasure that I state that the exchange is now ready to shift gear from transformation towards growth, “he said.
He stated that the NSE has recorded great strides during its transformation journey that brought about major reviews on corporate governance, market structure, operations, a stronger regulatory environment and the implementation of innovations required to deliver a robust and efficient capital market.“When we started the journey to transform the exchange, we started with corporate governance and embedded it in all our dealings from the council to the committees all the way down to the day-to-day running of the exchange. We developed, documented, optimised and automated multiple policies and procedures to deliver operational efficiency, Today, we hold ourselves to the same standards that we ask of other companies,” Onyema said.
According to him, the liquidity and depth of the market were boosted by implementing changes in its market structures in 2012 with the introduction of market making in equities and fixed incomes as well as launching securities lending and selling. Furthermore, the NSE introduced opening and closing rotational pre-open and pre-close adjust sessions to provide a window for markets to support liquidity during the opening and closing auctions.
He pointed out that operating a fair and orderly market by instituting frameworks that would sustain investors’ confidence has been at the heart of regulating the exchange during this transformation journey. “A strong regulatory environment is essential to protecting against infraction and enhancing investors’ confidence in the market. To this end, the exchange has ensured that it has clear and enforceable rules with zero tolerance policy on all infractions.”
He added that the NSE has followed up its compliance measures with tight enforcement procedures that include inspection, market surveillance and a vigorous penalty system. The exchange has equally re-invigorated the Investors’ Protection Fund, which provides investors with a statutory backed solution for reducing loses they might have suffered as a result of bankruptcy, insolvency, wrong doing or negligence of a dealing member.
Onyema explained that the initiatives put in place for the transformation of the exchange were directed toward the development of a more transparent, liquid and accessible market with a modern market structure that could support the delivery of a wider range of investment products. He noted that the honest engagement the management of the NSE had with investors, listed companies, market operators, the regulator and prospective issuers, had ensured that those who lost faith in the capital market are now returning to the market. Consequently, the exchange has started to witness a sense of optimism from all market stakeholders in the nation’s capital market.
“To illustrate this point, the Average Daily Value traded (ADVT) was up approximately 4.74 per cent in 2012 at $17.5 million, and 57.36 per cent in 2013 at $26 million. Year to date 2014, we are tracking at $27.63 million ADVT. This highlights the fact that people are starting to see the value of investing in Nigeria and confirms that we are moving in the right direction.”
Satisfied with the achievements the NSE recorded with its transformation that lasted between 2011 and 2014, Onyema revealed that the exchange has started work on its new medium-term strategic direction for 2014-2019. “Our corporate strategy strives to solidify our leadership position as Africa’s foremost securities exchange, and aims to increase our footprint in the region (and internationally), by creating a market platform that is compelling for domestic and global issuers and investors.
“To attract more companies to list, and to attract and retain a larger pool of investors, at the minimum, we must ensure that we maintain stable and consistent policy regimes, and uphold fair and orderly markets based on just and equitable principles that will generate and preserve issuer and investor confidence in our markets. We realise that to attract more companies to list, we must partner with policy makers to take full advantage of developmental initiatives which require massive mobilisation of capital,” he said.