13 February 2013

Nigeria: NASD Gets Final Approval, Commences Operations Q2

The Nigerian capital market will witness another boost in April as NASD Limited has received its final approval from the Securities and Exchange Commission (SEC) to operate over-the-counter (OTC) market in the country.

NASD Limited, formed in 1998 to promote and operate an Over-the-counter (OTC), had earlier got an approval-in-principle from SEC to operate the OTC market in Nigeria.

The company has been putting in place other requirements including adequate capital base, efficient trading platform among others before it would be given final approval.

Communications Adviser to the Director-General of SEC, Mr. Obi Adindu, confirmed to THISDAY that the commission had given final approval to NASD Limited.

Also, the Chairman of the Technical Committee of NASD Limited, Mr. Victor Ogienwonyi, told THISDAY that NASD was now licensed and had started test-running.

"NASD is now licensed and we have started testing. We are about to start promotion for the market. We expect that our platform will be up and running by April," he said.

Market analysts have hailed this development, saying it would further complement the commencement of retail bonds trading and make the market for attractive.

Investors who bought shares of unlisted public liabilities companies (PLCs) have been waiting for NASD Limited to trade their shares.

Many PLCs sold shares to investors during the stock market boom period of 2006 and 2007 with the promise to list them on the NSE. However, they have not listed the companies, thus leaving the investors stranded.

One of such investors, Mr. Andrew Iwunze, had told THISDAY that the only hope for him and others holding the shares of unlisted PLCs is the proposed OTC market to be operated by NASD Limited.

"I have made some enquiries about NASD Limited and I am eagerly waiting for them to commence operations so that I can liquidate some of my investments," he said.

Speaking on how the NASD Limited will assist investors of unlisted PLCs, Ogienwonyi, said the way the OTC market worked was for investors in public liability companies (PLCs), who want to sell their shares to give them to a broker, who will list the offer on the NASD and anyone buying will also contact a broker to put in a bid on his behalf.

"Once a trade occurs, the NSAD will list the trade and ensure settlement through the Securities Clearing and Settlement System Plc (CSCS). Once a company is a PLC, its shares can be traded on the NASD whether it is formally listed or not. There are thousands of investors who will want to get out of their positions. OTC markets like NASD will provide the exit for the PLC stocks that are not listed. The market will also be a place to buy and sell bonds especially the states and corporate debentures that have little liquidity," Ogiemwonyi said.

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