The Nigerian capital market is believed to have opened up multiple options for securities dealers in Nigeria as stockbrokers await the take-off of demutualisation of the Nigerian Stock Exchange.
The Capital Market boasts of FMDQ Securities Exchange, a full-fledged exchange and the NASD OTC Plc for unlisted securities. Besides, the Lagos Commodities and Futures Exchange (LCFE) is expected to commence operations soon as a Pan African Exchange among others.
Oyinyechukwu Ezeagu, Chairman, Association of Securities Dealing Houses of Nigeria (ASHON), described the development as heartwarming, saying that it had brought multiple income streams to stockbrokers’ table.
“The new trend in the financial market is that operators have multiple options for professional practice. These go along with multiple income streams on the table of market operators. We are looking at a broad range of markets and the readiness of operators to participate in these markets.
“We have seen an expansion in fixed income investments, in Government Securities and renewed interests in the Commodities Market. The listing of two telecommunications companies excited the market within the year”, said Ezeagu.
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According to him, equity market represents the market of the real owners of the firm, taking into consideration the features of the theoretical common stock and the performance of the equity market in Nigeria is not different from its worldwide nature of performance.
Ezeagu noted that equities had been dwindling all over the world becoming enigmatic for traders who could not keep up with continuous price volatility, especially, where other asset classes like fixed income proved better alternatives.
Commenting on the implications, he said: “This has serious implications to the operators who hold equities as part of their capital they have to contend with pressures from regulators to maintain the minimum regulatory capital requirement. On the part of investors, there is a renewal of the age -long attitude to buy and hold which also impacts on market liquidity. However, with the recent pronouncement by the Central Bank of Nigeria, equities market seems to have responded positively.”
He spoke on the impending demutualisation of the Nigerian Stock Exchange saying: “It had been in the works for a while and ASHON has been involved in the discussions. We represent firms that will transit from members to shareholders of the Exchange. We are gearing up to this new responsibility and the benefits we expect to flow from the laudable venture.
“Our members are being repositioned to operate under the demutualized Exchange. ASHON’s members are currently the owners of The Nigerian Stock Exchange. We have embarked on strategic restructuring to bolster the members’ image, consolidate a formidable team and review internal processes among others.
“The process of Demutualisation of the NSE is approaching a climax. We expect that we shall transform from being members to Shareholders soon. It is important that we prepare ourselves for the change in status which comes with some responsibilities and new realities. All our members representing us both at the Advisory Committee and the NSE Council have been working tirelessly to defend our collective interests in the demutualisation process.
“In order to effectively re-position the image of the Association, we redesigned and changed the brand identity of the Association with a logo of progressive bars of different vibrant colors to depict the new thinking and divergent positive outlook of the Association. The Association has set out to reposition herself and Members to expand our horizon by exploring the potentials of trading in other securities like commodities and fixed income.
“The economy is changing, the environment is changing as technology evolves with the times. We encourage investors to embrace technology so as to keep abreast with the new ways of doing business in terms of investing, reporting, earnings and record keeping/retrieval. The investors should not, notwithstanding the ease of doing business offered by technology, neglect the expert advice of their Stockbrokers.”
Only recently, some capital market operators urged the federal government to engage capital market professionals to strengthen the relationship between the government and the market.
“The government should involve capital market professionals in the preparation of the National Budget. It portends good if Stockbrokers are co-opted into some government policy making fora that relate to the capital market and the economy in general. We cannot but emphasize that our capital market has the capacity to finance infrastructural development needs of the country if properly harnessed and government has a role to play in using the Capital market to fund its infrastructural needs. Furthermore, until government begins to see the operators in the capital market as partners in progress, the paucity and high cost of funding of infrastructure will continue to be a nightmare that will ultimately have negative impact on the economic performance of our national budget”, said Ezeagu
