The NASD plc has opened unlisted securities for lien arraignments, saying that before the NASD Over-The-Counter (OTC) market opened, unlisted securities were applied to lien with great difficulty and at great cost.
Lien is the legal right of a creditor to sell the collateral property of a debtor who fails to meet the obligations of a loan contract. If the debtor never pays, the property can be auctioned off to pay the lien holder.
“The arrangements were sometimes difficult to enforce if necessary and discounts on the value of the stock were usually deep (or at nominal value) due to absence of a universally accepted price (such as a daily closing price),” the NASD further said.
“NASD is pleased to announce that both issues have been resolved. Both shareholders and lenders will be pleased to learn that OTC trading stocks now qualify for lien arrangements due to a joint effort of NASD OTC and Central Securities Clearing System (CSCS),” it further said.
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NASD provides universally acceptable prices as a reference while the clearing system will hold dematerialised shares according to the terms of the borrower/lender agreement. If the borrower pays, the shares are returned and if the borrower defaults the shares can be auctioned off on the NASD OTC market.
The collective achievements of the NASD market in the past year 2014 shows 19 securities trading with market capitalisation in excess of N600 billion; over N2 billion turnover; 86 broker/dealer firms registered as participating institutions; 140 traders were inducted into the market; 24 issuing houses were accredited to participate in the market, and over 150 back-office personnel in operations and compliance functions were trained at the NASD OTC market.
Also, the NASD OTC market in 2014 facilitated easy access to CSCS data exchange portal for efficient market interaction and participation, and created an eco-system made up of banks, trading platforms clearing systems and brokers.
“Our expectation in 2015 is to expand our market in the following areas: number of securities trading, volume of dematerialised securities, number of participating institutions, turnover volume and value, and other product lines,” said Bola Ajomale, managing director, NASD plc.
