Top investment banks seek to join Nigeria- Bourse CEO

Nigeria’s stock exchange (NSE) is reviewing applications from some leading global investment banks to join its trading floor, as reforms aimed at improving liquidity and transparency bear fruit, it’s CEO said last week.

Oscar Onyema, Bourse CEO told the Reuters Africa Investment Summit in Lagos that a return of confidence in the market from domestic investors burned by a 2009 financial crisis had reversed the trend of foreigners holding most Nigerian shares.

Domestic investors now accounted for 59 percent of holdings, on the NSE, against 45 percent at the end of last year, he said.

“We cannot announce which ones yet but they are … in the top ten in the world,” Onyema said of the banks that had filed applications to trade on the NSE.

Citibank and JP Morgan both have a presence in Nigeria, but do not trade shares on the NSE, which is currently dominated largely by small local stock brokers.

Rencap and Standard Bank both already have traders operating on the bourse floor.

Before the stock market bubble burst in 2008, wiping nearly two-thirds off its value in a year, domestic investors owned 85 percent of shares, with foreigners owning the rest.

That ratio had fallen to 43 percent domestic against 67 percent foreign by the end of 2011.

“I don’t believe confidence has fully returned, but a great deal of confidence is back,” Onyema said.

“Local investors are coming back to the market in droves, especially the institutional investors,” he said.

Africa’s second biggest bourse has made a series of sweeping reforms since it emerged from the 2009 financial crisis that nearly saw nine banks go under. These have included tighter regulations, introducing a new trading technology platform, bringing in market makers and allowing short selling.

The new platform using technology would be ready to go online by the third quarter of this year, he said.

The bourse last year introduced its first exchange traded fund (ETF) and its first retail bond index, and Onyema said it aimed to enable depository receipts to be listed in Nigeria this year, and to start trading derivative products in 2014.