SEC targets 50% market cap-to-GDP ratio by 2026

…Says new e-dividend portal berths Nov. 30

…Puts collective investment schemes value at N2.1trn

Nigeria’s Securities and Exchange Commission (SEC) has set a few targets it would like to achieve going forward.

One is to fulfil its assigned presidential targets, according to Lamido Yuguda, Director General, SEC.

“We take these targets seriously and would like to assure the government that we would meet and even surpass these targets. We have also set for ourselves the target of improving the market capitalisation to GDP ratio. Presently at about 30 percent, we target 50 percent over the next three years,” he noted at the ongoing SEC Journalists Academy in Lagos.

To achieve these targets, the Commission said it will continue to evolve and reinvent itself to respond appropriately to the dynamic environment that is the market.

In doing this, the SEC said it will always have the ultimate goal in mind – to improve the standard of living of the Nigerian people.

The role of the SEC is to develop and regulate this market, making it fair and safe for issuers, intermediaries, and investors. To do this, the Commission makes rules and regulations that guide the market. It also supports product and market development, guiding innovation in the market.

Read also: Unclaimed dividend stands at N190bn, says SEC

The SEC DG said to help solve the perennial problem of unclaimed dividends, the Capital Market Committee, under the leadership of the Commission, has embarked on the creation of a new e-dividend portal, which is expected to become operational on November 30, 2023.

“Once operational, this portal will simplify the process of mandating accounts for e-dividend. This will improve efficiency and ultimately lead to a significant fall in unclaimed dividends,” added.

To manage risk and entrench trust in collective investment schemes (CIS), Securities and Exchange Commission said it mandated that all CIS funds be held in custody which has helped the growth of these funds from about N1.1 trillion at the beginning of 2020 to about N2.1 trillion at the end of October 2023.

“We continue to encourage investors, especially those on the retail end, to approach the market through these CIS funds, as they provide investors with the opportunity to have their investments managed by knowledgeable investment professionals,” he said.

In furtherance of its efforts to ensure that new dividends do not become unclaimed, the Commission is presently supporting work on an identity management system that would ensure that investors and market participants are properly identified so as to forestall the problems that led to the accumulation of unclaimed dividends.

“In line with the Commission’s developmental role, the zonal offices continue to conduct investor clinics. These clinics provide solutions to investors dealing with issues relating to their investments in the capital market. They also serve as good platforms for investor education and awareness. The clinics also support the financial inclusion efforts of the Commission,” Yuguda said.

The capital market plays a pivotal role in the economic growth and development of a nation. It is a veritable source of financing for wealth creation and infrastructural development. Its role of connecting capital to ideas is the foundation on which development occurs. The more efficient this connection is, the faster development occurs and the better the lives of the people of the country will be.

The SEC continues to warn investors and the public about cryptocurrencies and digital assets such as contracts for differences, and FX trades that are not licensed by CBN or the Commission.

Read also: SEC, SON collaborate to set standards for Nigeria’s commodities market

He said: “Since they are unregulated, the investing public has no protection when they invest in them. The Commission and other regulators continue to work to find the best way to handle these assets and their proliferation in our market”.

Over the past four years, the Commission has done a lot to improve the Nigerian capital market, leading to reasonable success and increasing the size and depth of the market.

Over the past four years, the Commission has worked hard to expand and deepen the market through the creation of new products and the expansion of existing ones. Two central counterparties (CCPs) were registered and over 30 derivatives contracts were approved to kick-start derivatives trading in Nigeria. Over the period, the Exchange Traded Funds (ETFs) market has grown from nothing to about from about N18 billion today.

“The non-interest capital markets segment is growing, and we continue to witness successful sukuk issuances. The green and blue bond markets are also beginning to see some activity.

“The Commodities market is also growing in leaps and bounds. The Commission has registered five commodities exchanges and supported their growth. It also supported the on-going revamp of the Nigerian Commodities Exchange (NCX) by the Central Bank of Nigeria,” Yuguda noted.

The Nigerian stock market has reached a new all-time high, with the NGX All-share Index crossing the 70,000-point mark on November 1, 2023.

This represents a more than 35 percent increase this year. At the close of trading on Tuesday, the Nigerian Exchange Limited (NGX) All-Share Index (ASI) and its market capitalisation increased respectively to 70,840.72 points and N38.940 trillion. The market’s year-to-date (YtD) increased to 38.22 percent.

“The consistent growth of the market is testament to the hard work put in by the entire market, led by the Commission”, SEC DG added.

Speaking further, he noted that over the past four years, “we have had tens of issuances – equities and bonds. In 2023, we have had a total of nineteen (19) new issuances valued at N338.39 billion. The Commission has also reviewed and approved 11 mergers and acquisitions this year.

“On its investor protection mandate, the Commission also continued its efforts to educate shareholders and the public about capital market operations through media channels. At the weekly enlightenment programs, discussions primarily focused on providing an overview of the Nigerian Capital Market and highlighting the consequences of engaging with ponzi scheme operators. The Commission has also issued several warnings about Ponzi schemes and digital assets not registered with the Commission,” he noted.

The SEC presently has a policy of supporting fintechs to be part of the capital market. “To guide them, the Commission created a fintech and innovation office whose mandate is to handhold such companies as they navigate regulations towards becoming capital market operators. We have also set up a regulatory incubation programme to enable these companies to test out their services in a safe environment as they get on-boarded into the market,” the DG of SEC further said.