Nigeria at par with world’s best as Stock Exchange joins WFE

The emergence of the Nigerian Stock Exchange (NSE) as a member of the World Federation of Exchanges (WFE) may have placed the local bourse ahead of other West African stock exchanges, as well as put it at par with other credible global exchanges, BusinessDay findings have shown.

The election, which has made the NSE the first West African stock exchange to be granted full federation membership status of the WFE came as a result of the local the bourse’s adherence to of global best practices, improved regulatory environment and conformity to high international standards.

By this development, the NSE is expected to play more active roles in the development of the local economy, unlike some offshore centers and over-the-counter markets, as the absolute size of the exchange is not a basis for membership.

At its 54th general assembly and annual meeting Tuesday in Seoul, South Korea, the World Federation of Exchanges elected the Nigerian Stock Exchange as its member –in line with the self regulatory organisation’s (SRO) ambition to become the foremost Stock Exchange in Africa.

This enviable position of NSE, analysts say, is  connected with laudable achievements of the capital market regulator, alongside the Nigerian Stock Exchange (NSE).

For instance, in the third-quarter to September 2014, the NSE total market capitalisation rose by 6.92% to $115.68billion (N19trn). Also in the equities market, capitalisation rose by 16.77% to $83.10 billion (N13.7trn); bonds market capitalisation stood at $32.57billion (N5.37trn), down by 12.06%.

Also in Q3, the average daily value traded at the stock market rose to $42.11million (N6.9billion), up 124.17%. Currently, the Nigerian bourse has about 200 listed equities, out of which 192 are listed companies.

Nigeria’s WFE membership came barely one week after the US Securities and Exchange Commission (US-SEC) described the Nigerian capital market as the best performing market in Africa.

A team of US-SEC officials led by Babback Sabahi, senior counsel ,told BusinessDay in Washington DC that  the “Nigerian stock market is doing well. Aruma Oteh is our hero; Oscar Onyema is extremely doing great, and is very innovative,” adding that the Nigerian capital market apex and self-regulators are helping the market to perform better than others.

On September 15-16, the WFE inspection team visited the Nigerian Stock Exchange –the inspection team consisted of the Federation and member exchanges. The team met with the NSE’s management team and several key stakeholders, including the Securities and Exchange Commission (SEC) of Nigeria, the Central Bank of Nigeria (CBN), the Central Securities Clearing System (CSCS), two corporates and other market operators.

Conformity to high international standards is a condition for attracting foreign issuers and investors, including foreign institutional investors; while the WFE sticks to standards around the operation of individual markets, where information and disclosure are concerned, and where regulation and rules that guide the operation of the markets are concerned.

With 60 members from around the globe and being home to more than 45,000 listed companies; the World Federation of Exchanges is the trade association for the operators of regulated financial exchanges.

“WFE membership is an important reference for many international investors and corporates. This membership status reflects the exchange’s commitment to implementing the highest standards of international best practice.

“We are very proud that the NSE has been granted full World Federation of Exchanges membership status,” said Oscar Onyema, Chief Executive Officer, Nigerian Stock Exchange.

“This is a positive step towards our integration with global financial markets. We put in a lot of hard work, and we have cultivated excellence in our day-to-day operations, which has earned us this recognition amongst our peers in this notable global trade association,” h e added.

Analysts believe that the Nigerian stock market which hitherto put many investors in the blubber mood will witness more inflows of foreign investable funds, a development which is capable of changing the negative 5.42% yield recorded last week’s.

Nicky Newton-King, Chief Executive Officer of the Johannesburg Stock Exchange (JSE) Limited and member of the Board of Directors at the WFE, commended the Nigerian Stock Exchange, saying: “This membership has been a long road for the Nigerian exchange.”

He added: “The WFE Review Committee tasked with their application commends them for the attention they have paid to putting in place the regulatory and technological infrastructure necessary, both for the NSE to meet global standards, as well as to position the Nigerian Stock Exchange for future growth.

“ It is  a this very significant, concerted effort by the team over the last three years that earned them the recommendation. We welcome them on board.”

Yvonne Emordi, Head of Strategy at the NSE and team lead for the Exchange’s WFE membership project also remarked: “This is indeed a wonderful achievement. It sets the tone for the upcoming Asia tour which the Nigerian Stock Exchange will kick-off in early December this year, to introduce our market to Asian fund managers with frontier and emerging market investment strategies. The 5-day tour will start in Singapore on December 1, 2014. ”

The NSE has similar standards with stock Exchanges like Abu Dhabi Securities Exchange, Amman Stock Exchange, Athens Exchange, Australian Securities Exchange, Bermuda Stock Exchange, BM&FBOVESPA S.A., BME Spanish Exchanges, Bolsa de Comercio de Buenos Aires, Bolsa de Comercio de Santiago, Bolsa de Valores de Colombia, Bolsa de Valores de Lima, Bolsa Mexicana de Valores, Borsa İstanbul, Bourse de Casablanca, Bourse de Luxembourg, BSE Limited, Bursa Malaysia, CBOE Holdings, Incorporated, China Financial Futures Exchange, CME Group, Colombo Stock Exchange, Cyprus Stock Exchange, Dalian Commodity Exchange, Deutsche Börse AG, Dubai Financial Market, Gretai Securities Market, HoChiMinh Stock Exchange, Hong Kong Exchanges and Clearing, Indonesia Stock Exchange, Intercontinental Exchange, Incorporated, International Securities Exchange, Irish Stock Exchange, Japan Exchange Group, Incorprated, Johannesburg Stock Exchange, Kazakhstan Stock Exchange, Korea Exchange, Malta Stock Exchange, and Moscow Exchange.

Others are Muscat Securities Market, Nasdaq, National Stock Exchange of India Limited, NZX Limited, Oslo Børs, Philippine Stock Exchange, Qatar Stock Exchange, Saudi Stock Exchange (Tadawul), Shanghai Futures Exchange, Shanghai Stock Exchange, Shenzhen Stock Exchange, Singapore Exchange, SIX Swiss Exchange, Stock Exchange of Mauritius, Stock Exchange of Thailand, Taiwan Futures Exchange, Taiwan Stock Exchange, Tel-Aviv Stock Exchange, The Egyptian Exchange, TMX Group Incorporated, Wiener Börse AG (CEE Stock Exchange Group), and Zhengzhou Commodity Exchange.

Iheanyi Nwachukwu