Nigerian Stock Exchange is expected to join league of strongest world capital market by 2025, sequel to the enactment of the demutualisation of the Nigerian Stock Exchange (NSE).
Some of the industry players including Chartered Institute of Stockbrokers; Central Securities Clearing System; Central Bank of Nigeria, Federal Ministry of Finance and Association of Stockbroking Houses of Nigeria, expressed the optimism at the public hearing held by the joint Senate and House Committee on Capital Market and Other Institutions, held on Thursday, at the National Assembly complex, Abuja.
According to them, the demutualisation was an integral part if the 10-year capital markets master plan, aimed at underpin the rapid growth that is envisioned over the next decade.
In his remarks, Tajudeen Yusuf, chairman, House Committee on Capital Market and other Institutions explained that the bill will boost Nigeria’s economic development.
On his part, Adedeji Lawal, CBN’s Deputy Director Legal Service Department who pledged solidarity for the demutualisation of the Exchange, disclosed that the initiative was to “stimulate economic growth, promote efficiency in the creation and harnessing of capital as well ad create liquidity in the capital market, adapt and strengthen corporate governance best practices.”
“We observed that this transition from a company limited by guarantee to a public company limited by shares, will promote efficiency in operations, enhance liquidity and strengthen corporate governance of the NSE.
“The demutualisation process will bring the NSE within the legacies of 56 out of 64 members if the World Federation of Exchanges which have de-mutualised.
“The dynamism presented to a demutualised Exchange would augument Nigeria’s debt profile and capital raising capabilities by providing a number of attractive vehicles for foreign and domestic investors.
“The proposed demutualisation will also enable the Exchange to facilitate capital to support Federal Government initiatives and infrastructure projects as well as assist corporates and financial institutions in raising much needed capital,” Lawal said.
He added that capital market and money market are dependent on each other, as a result, efforts aimed at improving the operations of the capital market would invariably make a positive impact on the money market, which is within the remit of the apex bank’s regulatory powers.
On his part, Oscar Onyema, NSE Chief Executive Officer who noted that the Minister of Finance, Kemi Adeosun fully supported the process, disclosed that the NSE is currently registered with Corporate Affairs Commission as a company limited by guarantee.
“In its current form, the Exchange is subject to several legal restrictions which have hampered its ability to operate competitively and profitably as a limited liability entity.
“Presently, the NSE is one of the right exchanges of the 63 members of World Federation of Exchange that still operate as mutual organization. Therefore demutualisation of the NSE will reposition it to a world class and performing organization.
“Demutualisation of the NSE will provide access to global market and capital required for business development. The capital would enable the exchange meet challenges of contemporary market without necessarily placing additional financial burden on participants,” Onyema noted.
In its submission, Central Securities Clearing Systems Plc, expressed optimism that the demutualisation of the Exchange will effect technological improvements which will allow for imrpooved efficiency and effectiveness in service delivery to its customers for the development of the capital markets while ensuring that the right of access to trading on the demutualised entity is not prohibitive.
“The opportunity to raise capital from new shareholders and a broader and more strategic shareholder pool, significantly improves the visibility institutional investors as shareholders will maximize economies of scale and scope, increase accessibility and market reach.
“A demutualised entity affords a wider investor base, including participating organizations, listed companies, institutional and retail investors, the opportunity to become shareholders in the demutualised entity.
“As a result of demutualisation, the exchange can build a more sustainable institution given its ability to raise capital, expand across geographies and better consummate strategic relationships,” he said.
