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Re-migration of FG’s bond to NSE will deepen value – Operators

By on March 26, 2011

FOLLOWING low value of equities, operators at the Nigerian Stock Exchange (NSE) have urged the Securities and Exchange Commission (SEC) to seek ways with the Dept Management Office (DMO) on how to re-migrate transactions on the Federal Government bonds back to the Exchange. FG bonds are currently being traded on Over the Counter Trade (OTC) market.

The operators, especially dealing members, said that the absence of trading of FG’s bonds had contributed immensely to the volatility of the equity market due to over concentration on equities, while trading in bonds is yet to get the desired attention.

The dealing members said introduction of bond trading on the NSE platform would help deepen the market and make the equity segment less volatile.

According to them, a world-class market is one that accommodates equities, debt instruments and derivatives which gives an investor alternative window to diversify its risks.

The NSE had earlier claimed that the trading facility on The Exchange had the ability to cater for both the wholesale and retail markets for fixed income securities as its bonds trading platform has various means of trading, depending on the options acceptable to the market operators and regulators.

It also added that one of the advantages of the NSE bonds trading platform over the OTC market was price discovery where the true value of the instrument is derived.

In his comment on the issue, the President, Association of Stock Broking Houses of Nigeria, Mr Yussuf Rasheed, lamented that the investing public were not giving the opportunity to benefit from Federal Government bonds as the stock circulates between the government and the banks .

“ There must be an avenue where the Primary Market Dealers (PMD) would sell these stocks to all Nigerians and the only avenue is through a secondary market by having those stocks listed on the Exchange so that ordinary people can partake on it and failure to do this is not good for the economy.”

Specifically, Rasheed explained that when government released the bonds, the PMD is supposed to release some or even all the stocks to the secondary market by listing them on the NSE to enable the investing public to benefit from it.

Source : Tribune