SEC moves to rescue stock market
?To adopt recommendations of Capital Market Comm
By KELECHI MGBOJI
Monday, February 8, 2010
The Director General of Securities and Exchange Commission, Ms Arunma Oteh, yesterday unveiled a five-point road map for rebuilding the Nigerian capital market vowing that her immediate priority of the reform agenda is to restore investor confidence.
Briefing newsmen on Friday, in Lagos, the newly appointed SEC DG said that the commission was going to adopt recommendations of the I5-man Capital Market Committee established to review the capital market late 2008.
"The 32 key recommendations articulate the reforms that are needed to lift the capital markets and these recommendations have laid the foundation for some of the key issues that we will be undertaking in SEC", Oteh said.
She noted that well functioning Capital Markets are essential to Nigeria's economic development stressing that to realize its full potential, the country must have a world class capital market that is strong, sustainable, well-functioning, and plays a central role in the economic development of the nation.
While vowing to adopt a zero tolerance policy against all infractions in the market place, she disclosed readiness of the commission to implement all measures to pull the market back from the brinks and position it as one of the leading capital markets in the continent.
"First of all, we have to increase the depth, breadth and sophistication of the market. There are a limited number of asset classes as the market is dominated by equity investments. Therefore we need to expand market offerings to include products such as fixed income securities. Hedging instruments such as futures and other derivatives need to be promoted as well as securities lending and Collective Investment Schemes", Oteh stated.
She also said that there was need to improve efficiency and cost competitiveness in all
aspects of the market as the high transaction costs are a huge deterence to companies wishing to list in the market.
She pointed out a fundamental need to strengthen regulatory oversight adding that on their part, SEC would improve the effectiveness of market regulation, oversight and supervision and also strengthen the SEC- in terms of its capacity and operations.
The SEC DG added that disclosure, transparency and accountability are also key issues that need to be addressed in the market saying that the commission must continue to send the right signals about the critical importance of integrity and transparency as critic, ingredients of good corporate governance.
Finally Oteh noted the need to establish strong institutions across the market and instill principles of risk management into capital market operations.
"We need the cooperation of all market operators to ensure that the SEC has access to a set of reliable information about operations in the capital markets. The SEC and the NSE will also be collaborating to update, implement, monitor and enforce a comprehensive risk management framework that reliably keeps systemic risk in check", the SEC boss concluded.
It could be recalled that as the capital market meltdown lasted there were deafening calls from stakeholders for far-reaching restructuring of the Exchange. Matters came to a head when the SEC Committee on the Nigerian Capital Market recommended sweeping changes in the market structure and processes, such that would definitely affect many areas of NSE and SEC operations if implemented. The recommendation which also proposed for a demutualization of the NSE was a subtle way to say that both regulators had failed to exercise efficiently their regulatory roles to stem the tide of fraud and sharp practices rife among market operators to the detriment of investors.
Critics in favour of sweeping changes beginning with the leadership of the regulatory bodies argue that since the recommended market reform is meant to clear the mess of the past, it is doubtful that leadership of the regulatory bodies will ensure faithful implementation of the Committee?s recommendations. For them if a new leadership is not put in place before the restructuring exercise begins, the credibility question will continue to haunt the market.