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NSE, CSCS: Pondering the Way Forward
- By Kayode Ogunwale
- Published June 7th, 2010
- StockWorld
- Unrated
The Nigerian Stock Exchange (NSE) and Central Securities Clearing System (CSCS) last week in Lagos organised a workshop for capital market correspondents in Nigeria. KAYODE OGUNWALE looks at some matters arising from the workshop.
THIS year’s workshop theme: “Reporting the Capital Market for Decision Making”, is quite unique in the sense that the market is just recovering from the debilitating effects of the global financial meltdown. Also, consumers of the report are not growing in leaps and bounds, but they need timely and explicit information to take position.
More than before, there is the need for all stakeholders in the market to team up and work in harmony for the full recovery of the market.
The workshop is a definite and pragmatic approach to the role of the accredited capital market correspondents in the new market environment where global best practice has been the benchmark for every business.
The expectation of investors, foreign or local, from the media is basically to disseminate information that would enhance investment decisions. This may be difficult except the journalist himself is well informed, as no one can give what he does not have.
Matters Arising
On the new security listing platform introduced by NSE, Mr. Funso Fatobi, deputy general manager/ head Alternative Securities Market /Private Placement Exchange (ASEM/PRIPEX) department of the exchange disclosed that the exchange has concluded arrangements to delist 11 of the remaining 16 companies listed on the second tier segment of the market.
He stressed that the companies will be axed for non-performance and their failure to fulfill their post-listing obligations in the last three years to both the investing public and the exchange.
According to him, “We have observed that for several years there was stagnancy in that market as a result of various challenges that faced the companies. The challenges, which are both internal and external, range from finance, management, access to information, lack of skills and technologies. Other areas include corruption, which is indeed a national problem, power generation and other infrastructural hindrances.”
He added that “Despite the huge potential of the SMEs, they have continued to perform below expectations in terms of profitability and return on investment. Also, there has not been any significant increase in the number of listed companies on this sector of the market for some years now. Trading activities in this sector is so low that its contribution to the total market capitalisation is less than 1 per cent.” Modelled after the London Stock Exchange (LSE’s) AIMs market, the newly redesigned platform, which the Securities and Exchange Commission (Sec) has approved, will now be known as the Alternative Securities Market /Private Placement Exchange (ASEM/PPEX).
He further stated that the exchange has scrapped the second tier market, which would be replaced by the Alternative Securities Market /Private Placement market, billed to commence with the process of listing of the various private placements instruments, and bought into by investors in the boom period of 2005-2008. The exchange also disclosed that it would commence the listing of all companies, which sold their shares to investors through the private placement instruments, during the period that preceded the crises in the stock market, from July 1, this year without pre-conditions.
He said, would assist in solving the problems faced by investors, who have no exit window to trade the securities bought from private placements. “During the boom period of 2005 and 2008, most of the companies that raised funds through private placements promised investors that the securities being offered would be listed on the NSE on completion of the issue exercise. This has not been the case, as a good number of the securities sold under the private placement exercise are yet to be listed, thereby leaving huge sums of monies left unaccounted for in the hands of these business promoters. In addition, there is no exit window for investors to trade the securities bought from private placements,” he said.
On dematerialization, Mr. Peter Egunbiyi the general manager operations of Central Securities Clearing System Limited said CSCS is waiting for stakeholders in the market to agree on the commencement of a fully dematerialised stock market. In his paper titled “Understanding the Operations of the Central Securities Clearing System”.
He said CSCS is fully ready for dematerialisation, adding that its system is underutilised. Egunbiyi noted that CSCS infrastructure is in line with the recommendations of the International Securities Organisations and the benchmark for securities settlement system.
The exchange also disclosed plans to have more than 1,000 companies on its official list by year 2015. According to Mr. Kene Okafor, the general manager, listing and quotations of the NSE said the programme will enhanced by the ongoing privatisation programme of the federal government, reduction in the transaction costs on the NSE, review of issuance/trading processes to improve efficiency and speed, adoption of book-building for new issues and adoption of market making, coupled with products diversification.
According to him, the volume and value of new issues have grown significantly in the last ten years and the growth prospects remains very high. He explained that the NSE approved new issues valued at N44.4 billion in 1999, N33.9 billion in 2000, N44.2 billion in 2001, N68.6 billion in 2002, N185 billion in 2003 and N2.6 trillion in 2008.He explained that there is bright prospect for the new issues market in future, which would enhance new listings on the NSE. Okafor said, “The new issues market has bright prospects both from the continental and national perspectives. There is improvement in the investment environment and many markets in the African region are actively promoting foreign investment. According to the OECD, private equity funds in Africa are now in excess of $2.3 billion and OECD reported that 40 African countries executed international investment road shows in 2006. Growth is also in excess of funds focused on North Africa and Middle East. He however listed some challenges on the generation of long term capital. According to him, “The capacity to generate long-term capital does not emerge spontaneously and though potentially useful, stock exchanges take time to nurture.”
Meanwhile, economist and financial expert, Dr. Biodun Adedipe has expressed concerns over the country’s ability to achieve its target of ranking among the top 20 economies in the world by the year 2020, as envisaged in the Vision 20:2020 programme of the federal government. Adedipe, who is the principal partner, Biodun Adedipe & Company, disclosed that the attainment of the objectives of the programme is hinged on the availability of necessary and adequate financial resources. He said that the availability of necessary and adequate financial resources is a major constraint to the attainment of the Vision 20:2020 objective.
He said, “Three major challenges to economic growth in any country, is availability, accessibility and affordability of financial resources.
Resource availability is a major constraint to the achievement of the country’s Vision 20:2020 objective.” He called on the government to provide a conducive environment for businesses in the country to thrive, adding that will help in ensuring growth, thereby driving the country towards the attainment of the objectives of the programme.
THIS year’s workshop theme: “Reporting the Capital Market for Decision Making”, is quite unique in the sense that the market is just recovering from the debilitating effects of the global financial meltdown. Also, consumers of the report are not growing in leaps and bounds, but they need timely and explicit information to take position.
More than before, there is the need for all stakeholders in the market to team up and work in harmony for the full recovery of the market.
The workshop is a definite and pragmatic approach to the role of the accredited capital market correspondents in the new market environment where global best practice has been the benchmark for every business.
The expectation of investors, foreign or local, from the media is basically to disseminate information that would enhance investment decisions. This may be difficult except the journalist himself is well informed, as no one can give what he does not have.
Matters Arising
On the new security listing platform introduced by NSE, Mr. Funso Fatobi, deputy general manager/ head Alternative Securities Market /Private Placement Exchange (ASEM/PRIPEX) department of the exchange disclosed that the exchange has concluded arrangements to delist 11 of the remaining 16 companies listed on the second tier segment of the market.
He stressed that the companies will be axed for non-performance and their failure to fulfill their post-listing obligations in the last three years to both the investing public and the exchange.
According to him, “We have observed that for several years there was stagnancy in that market as a result of various challenges that faced the companies. The challenges, which are both internal and external, range from finance, management, access to information, lack of skills and technologies. Other areas include corruption, which is indeed a national problem, power generation and other infrastructural hindrances.”
He added that “Despite the huge potential of the SMEs, they have continued to perform below expectations in terms of profitability and return on investment. Also, there has not been any significant increase in the number of listed companies on this sector of the market for some years now. Trading activities in this sector is so low that its contribution to the total market capitalisation is less than 1 per cent.” Modelled after the London Stock Exchange (LSE’s) AIMs market, the newly redesigned platform, which the Securities and Exchange Commission (Sec) has approved, will now be known as the Alternative Securities Market /Private Placement Exchange (ASEM/PPEX).
He further stated that the exchange has scrapped the second tier market, which would be replaced by the Alternative Securities Market /Private Placement market, billed to commence with the process of listing of the various private placements instruments, and bought into by investors in the boom period of 2005-2008. The exchange also disclosed that it would commence the listing of all companies, which sold their shares to investors through the private placement instruments, during the period that preceded the crises in the stock market, from July 1, this year without pre-conditions.
He said, would assist in solving the problems faced by investors, who have no exit window to trade the securities bought from private placements. “During the boom period of 2005 and 2008, most of the companies that raised funds through private placements promised investors that the securities being offered would be listed on the NSE on completion of the issue exercise. This has not been the case, as a good number of the securities sold under the private placement exercise are yet to be listed, thereby leaving huge sums of monies left unaccounted for in the hands of these business promoters. In addition, there is no exit window for investors to trade the securities bought from private placements,” he said.
On dematerialization, Mr. Peter Egunbiyi the general manager operations of Central Securities Clearing System Limited said CSCS is waiting for stakeholders in the market to agree on the commencement of a fully dematerialised stock market. In his paper titled “Understanding the Operations of the Central Securities Clearing System”.
He said CSCS is fully ready for dematerialisation, adding that its system is underutilised. Egunbiyi noted that CSCS infrastructure is in line with the recommendations of the International Securities Organisations and the benchmark for securities settlement system.
The exchange also disclosed plans to have more than 1,000 companies on its official list by year 2015. According to Mr. Kene Okafor, the general manager, listing and quotations of the NSE said the programme will enhanced by the ongoing privatisation programme of the federal government, reduction in the transaction costs on the NSE, review of issuance/trading processes to improve efficiency and speed, adoption of book-building for new issues and adoption of market making, coupled with products diversification.
According to him, the volume and value of new issues have grown significantly in the last ten years and the growth prospects remains very high. He explained that the NSE approved new issues valued at N44.4 billion in 1999, N33.9 billion in 2000, N44.2 billion in 2001, N68.6 billion in 2002, N185 billion in 2003 and N2.6 trillion in 2008.He explained that there is bright prospect for the new issues market in future, which would enhance new listings on the NSE. Okafor said, “The new issues market has bright prospects both from the continental and national perspectives. There is improvement in the investment environment and many markets in the African region are actively promoting foreign investment. According to the OECD, private equity funds in Africa are now in excess of $2.3 billion and OECD reported that 40 African countries executed international investment road shows in 2006. Growth is also in excess of funds focused on North Africa and Middle East. He however listed some challenges on the generation of long term capital. According to him, “The capacity to generate long-term capital does not emerge spontaneously and though potentially useful, stock exchanges take time to nurture.”
Meanwhile, economist and financial expert, Dr. Biodun Adedipe has expressed concerns over the country’s ability to achieve its target of ranking among the top 20 economies in the world by the year 2020, as envisaged in the Vision 20:2020 programme of the federal government. Adedipe, who is the principal partner, Biodun Adedipe & Company, disclosed that the attainment of the objectives of the programme is hinged on the availability of necessary and adequate financial resources. He said that the availability of necessary and adequate financial resources is a major constraint to the attainment of the Vision 20:2020 objective.
He said, “Three major challenges to economic growth in any country, is availability, accessibility and affordability of financial resources.
Resource availability is a major constraint to the achievement of the country’s Vision 20:2020 objective.” He called on the government to provide a conducive environment for businesses in the country to thrive, adding that will help in ensuring growth, thereby driving the country towards the attainment of the objectives of the programme.
