The Chartered Institute of Stockbrokers (CIS) has urged the Central Bank of Nigeria (CBN) to support the institute to boost transactions in the Nigerian securities market.
In a courtesy visit by the leadership of the Institute to the CBN Governor, Olayemi Cardoso, the stockbrokers, led by the President and Chairman of Council, Oluwole Adeosun, applauded the appointment of senior stockbrokers in some key positions in the economy by the Federal Government.
Adeosun, who noted that Cardoso had been a long-standing member of the Institute explained that stockbroking firms required some supports from the CBN to enable them operate optimally and attract more participants into the market.
Besides, Adeosun affirmed the capacity and willingness of stockbrokers to support the proposed recapitalization of banks in the next 24 months. According to him, this has been demonstrated during the previous recapitalization programmes in Nigeria.
“The Nigerian capital market, has the capacity to support the recapitalisation exercise. It was demonstrated during the indigenisation exercise as far back as 1972 and successive banking sector recapitalisation programmes over the years up till the last major banking recapitalisation exercise between 2004 – 2006.
“As we did in the last exercise as Issuing Houses/financial advisers and Stockbrokers to the Capital Issues amongst others. With technology and new subscription channels like mobile apps, the current exercise should record even greater success and bring in more and younger Nigerians into the investment community.
“We request that securities of publicly listed banks should be allowed as marginable securities as long as these securities pass the ‘Criteria for Determining Marginable Securities’ test. Margin lending drives the growth of capital markets in the advanced countries by enabling investors to acquire securities in excess of their direct savings within a regulated market framework.
He noted that the nation’s capital market will not be able to match the required growth rate if investors remain restricted to just their own funds for investments.
“Our perspective is that bank stocks be allowed, but a specific borrower should not invest in the shares of the bank that gave them the margin loan. The banking sector is one of the most active sectors in the Nigerian stock market and the first choice for most investors’ portfolios.”,
explained Adeosun.
” Pension funds are globally the foundational base that drive sustainable liquidity for the local equity market. He lamented that while the Pension Act permits the Pension Fund Administrators to invest up to 25 per cent of their pension assets in the equity arm of the capital market, about 10 per cent of the funds are invested in the Nigerian equities market, despite the enhanced regulation, investor protection, and high return in the market.
Adeosun pointed out that given the critical role of pension fund investment in mobilising liquidity in the domestic equity market, Pension Fund Administrators (PFAs) should be investing a substantially higher proportion of their funds on equities.
Responding, Cardoso appreciated the visit and assured the Institute that all the issues raised would be looked at. He also promised to establish an enduring institutionalised structure.
The newly launched book of CIS, titled: “History of The Nigerian Capital Market was presented to Cardoso. The President was accompanied on the visit by other Office holders and five Past Presidents.
