Daily Independent (Lagos)
13 October 2008
opinion
Established in 1960 and named Lagos Stock Exchange, the capital market operator became The Nigerian Stock Exchange (NSE)in December 1977. Ever since, the NSE, with the mission to "promote increased capital formation in Nigeria by providing issuers and investors with a responsive, fair and efficient stock market through competent and dedicated professionals using the latest technology" is a self-regulatory organisation (SRO), and proving capable to take the Nigerian economy to such an enviable height.
The mission of the NSE indicates that the SRO is out "to promote increased capital formation in Nigeria by providing issuers and investors with a responsive, fair and efficient stock market through competent and dedicated professionals using the latest technology, thus assuring local and foreign investors access to the Nigerian stock market with confidence both in the regulatory framework and in the reliability of trading and settlement systems."
Examining the robustness and latest status of the Exchange, NSE which had 19 listed securities when it started in 1961can now boast of over 200 listed securities in its close to 50 years of existence. So, also in its development efforts, the NSE has established trading floors in several commercial cities in Nigeria, including Benin and Ilorin. It is also expected that more trading floors will come up especially in Uyo and Bauchi.
Another test-case to prove the robustness and maturity of NSE is the banking reform programme which, within 18 months, saw to it that the first phase of the exercise was well midwived by the capital market, ensuring that banks that came to the market for fund were not disappointed. It is noteworthy that the NSE is keen about making global impact through the facilitation of flow of international investments to Nigeria.
However, in line with the global capital market trend, the NSE has just attained a bend, but not the end - it is expected that the Exchange's destination be in line with those of its kind that command global respect, and are run as full-fledged limited liability company. So far, the NSE has remained an SRO, administered by a council with a director general functioning as the chief reporting officer.
It can no longer be said that the NSE is too young to become a Limited Liability Company (PLC)with shareholders entirely owning it, a development that would enable the Nigerian capital market reap the full benefits of its internationalisation. The NSE should no longer delay in becoming a PLC - a company listed on its own market and with potential for dual (or multiple)listing - with its subsidiaries (the Central Securities Clearing System (CSCS), etc.)and duly owned by the shareholders. Becoming a PLC will enable the NSE remove the toga of a "SRO" from its neck and operate more efficiently as a profit- making organisation.
It is my opinion that regulatory responsibilities should be transferred and solely handled by the Securities and Exchange Commission (SEC). Duplicating regulatory authority is not only cumbersome but also outdated. SEC is already performing a supervisory role and defending legislations guiding the activities of the NSE (such as the Investments & Securities Decree 45, 1999, Companies and Allied Matters Decree 1990, Nigerian Investment Promotion Commission Decree, 1995, and Foreign Exchange (Miscellaneous Provisions)Decree, 1995 - somehow they are all Decrees).
This demands that the NSE fully become a beautiful damsel for global courtship in view of its strategic position in Africa.
At present, the governing council and the Executive Management Team of the NSE are made up of a long list of individuals and firms. A limited liability company structure will tidy the existing arrangement and make it more 21st Century compliant.
The London Stock Exchange (LSE)which the NSE is patterned after became a private limited company in 1986 by its deregulation (known as the "Big Bang")as occasioned by the Companies Act of 1985. But what the LSE could not achieve over a long period is now possible for the NSE with the advent of technology and its advancement. Activities of the LSE as a public limited company has greatly increased its credibility and aided its quest at becoming the global capital market of choice. Views of shareholders, as pursued by LSE's board of directors, determine the direction of its thrust. Its global relevance and status notwithstanding, the LSE recently opened its Asia-Pacific regional office in Hong Kong to take advantage of business expansion and exhibit its commitment to the region. According to it, the opening of the regional office would enable it get closer to its existing Asian customers and further attract Asian companies to London.
On its own, the New York Stock Exchange, popularly known as NYSE Group Inc., is a holding company made up of three merged institutions (the New York Stock Exchange (NYSE), NYSE Arca (Archipelago Exchange), and the Pacific Exchange (PCX), and strengthens for a global performance - a union touted to be the largest ever among securities exchanges and a "leading global multi-asset financial marketplace that operates multiple securities market centres."
Borrowing the words of the LSE that the 'customers make the market' and that superior value should be delivered to customers and shareholders, the NSE owes it a duty to fully submit to a system whereby millions of shareholders investing in the Nigerian economy can take full possession of the NSE as a limited company to nurture, hold and grow.
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