Capital Market Committee To Propel Nigeria’s Economic Growth

By: Salamatu Ejembi, Lagos

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The Capital Market Committee meeting announces the CMC’s dedication to propelling Nigeria’s economic growth by fostering collaboration, and embracing innovation to build a greater future for our nation.

The Director-General of the Securities and Exchange Commission, (SEC), Lamido Yuguda, said the just concluded CMC meeting has once again offered the capital market community an opportunity to rededicate its efforts towards further deepening of the market to serve as a veritable tool for infrastructure financing in the country.

Yuguda said that the meeting featured an overview of key developments in the capital market as CMC members listened to updates from heads of various market infrastructures and CMC Technical Committees, as well as observer groups.

The SEC DG who is also the Chairman of the CMC meeting, provided updates on new issuances, mergers and acquisitions, and regulatory measures, including directives on Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) compliance.

Yuguda also announced the Commission’s efforts in digitization, market modernization, HR restructuring, and collaboration with other stakeholders, domestic and foreign.

The Chairperson of the Technical Committee on the Commodities Trading Ecosystem, Ms Daisey Ekineh, said that there is an ongoing engagement with the Standards Organization of Nigeria (SON) to secure approval of certain standards and the adoption of additional commodity standards sanctioned by the African Organisation for Standardisation (ARSO).

She then highlighted other initiatives by the Technical Committee, with a particular focus on introducing commodity derivatives

Ms Ekineh also highlighted other ongoing engagements, including efforts to work with the National Insurance Commission (NAICOM) to further de-risk the ecosystem by introducing insurance products that suit the needs of the commodities producers and traders.

Also at the meeting, the E-Dividend Mandate Technical Committee presented an update on the collaborative project with the Institute of Capital Market Registrars (ICMR) and Nigeria Inter-Bank Settlement System Plc (NIBSS) to enhance the e-Dividend portal.

The Committee Chair, Mrs Hafsat Rufai, reaffirmed its commitment to the project’s timely completion, aiming for a launch on or before November 30, 2023.

Nigeria Inter-Bank Settlement System Plc (NIBSS) showcased the revamped portal to the e-Dividend Mandate Committee while also demonstrating its dedication to delivering the project in line with the revised project work plan.

The Committee noted that 18 out of 19 Registrars had submitted updated data on Un-Mandated Accounts for upload.

The Portal progress updates will be provided at the next CMC meeting.

The Financial Literacy Technical Committee (FLTC) informed the CMC that it convened a Regional Investor Awareness Conference at the University of Ilorin, Kwara State, on November 9, 2023.

The conference brought together representatives from nine universities in Kwara State.

The Committee also apprised members of the ongoing work to include capital market studies in the curricula of schools in Nigeria.

It called on stakeholders who were yet to complete their contributions to the project to do so.

The Non-Interest Technical Committee Chairperson, Mrs. Hajara Adeola, provided a comprehensive overview of key developments since the previous meeting, which include; the successful issuance of the 6th FGN Sukuk by the Debt Management Office (DMO) with a remarkable subscription level of 435%; floatation of additional Shariah-compliant Fixed-Income Fund; and hosting of a capacity-building workshop for stakeholders in non-interest segment by SEC.

The Committee also informed members of finalized plans to engage with various stakeholders to explore the development of Shariah-compliant liquidity instruments for the commodities market, and the creation of short-term Sukuk with the DMO.

Mrs. Adeola acknowledged the challenges faced in the non-interest market, including; lack of awareness on the existence of the Non-Interest Pension Funds; absence of an established commodities market for non-interest instruments; limited pool of investment-grade potential corporate sukuk issuers within the domestic capital market; and the unavailability of a sukuk issuance calendar and short-term liquidity instruments.

The Nigeria Exchange (NGX) Limited informed members that globally, equities markets had fairly rebounded due to the reallocation of capital by investors following the slowdown in rate hikes by the US Fed and other central banks, and higher risk appetites.

The NGX attributed the +36.67% performance of the NGX ASI to attractive yields of some stocks, improved sentiments among domestic retail investors, the inability of T-bills and other fixed income instruments to provide a positive real return, recovering corporate earnings, as well as fiscal and monetary policy shifts

He observed that market participation had remained heavily skewed to domestic investors.

The NASD OTC Securities Exchange gave updates to the Committee, noting that the Over The Counter, OTC Securities Exchange had seen positive performance, with the NASD Securities Index (NSI) increasing by 17.1% year-to-date (YTD) to reach 831.09 points by the end of October 2023. While the Market Cap. rose by 20.81% YTD, driven in part by the admission of new securities.

In a year-on-year (YoY) comparison, there was a significant 40.67% increase in the number of deals, and trading activities saw increases of 16.62% and 29.58% in volume and value, respectively.

The FMDQ told the Committee that on Tuesday, September 12, 2023, FMDQ Group Plc introduced the recently launched 10-year National Housing Strategy Blueprint (NHSB) to the Federal Ministry of Housing and Urban Development.

All stages of the FMDQ Derivatives Market Development Project had been successfully executed, and regulatory approvals had been secured for additional FMDQ Exchange-Traded Derivatives (ETD) products.

On their part, the Central Securities Clearing System Plc, CSCS reported a 23% growth in the average daily clearing and settlement value to around N10.7 billion in Q3 ’23, although it dropped to N5.3 billion in Oct ’23.

On a year-on-year basis, as of October 2023, there was a 60% growth, driven by bullish sentiments and solid performance of key equities in their half-year results.

Monthly investor KYC saw 8,572 Accounts updated in Q3 2023, a 31% increase compared to Q2 2023, attributed to positive market sentiments.

The CSCS emphasized the need for a coordinated awareness campaign on updating KYC, advocating for market-wide collaboration and a comprehensive campaign across various media channels.

The CSCS then called for the cooperation of the Registrars to share investors’ bio-data details on dividend claims with the Depository, expecting this to increase the number of accounts with updated records while stressing the importance of developing additional pathways for KYC data updates beyond trading.

The Nigeria Commodity Exchange (NCX) informed the committee of the appointment of an MD/CEO, Mr Anthony Atuche, and the termination of the Transition Management Team, as well as the rebranding of the NCX to an institution with a private sector outlook, its public sector ownership notwithstanding.

NG Clearing Limited informed the committee of the value proposition for central clearing as well as its product development drive and that it was strategically prioritizing the onboarding of new Trading Members.

The Nigerian Capital Market Institute (NCMI) informed members that the Board of the institute has approved the introduction of seven (7) new specialized programs, namely: School of Investment Banking, School of Compliance, School of Islamic Finance, School of Investment Management, School of Corporate Governance, School of Commodities Market, School of Fintech.

These programs are designed to enhance understanding of the Nigerian Capital Market’s operations, workings, and technicalities.

 

Olusola Akintonde