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SEC appoints First Bank as lending agent for NSE’s transactions

By on February 12, 2013

The  Securities and Exchange Commission (SEC) may have appointed First Bank of Nigeria as a Securities Lending Agent (SLA) for equities and bond transactions on the Nigerian Stock Exchange (NSE).

With the appointment, First Bank has joined UBA and Stanbic IBTC as lending agents on the NSE. The two banks were appointed SLA’s for Equities and Bond transactions at the Nigeria’s Exchange in August, 2012.

Securities Lending’s transaction involves the temporary loan of Securities from a lender to a borrower, usually through a Security Lending Agent. It is the act of loaning stocks, derivatives or other securities to an investor or firm.

The borrower (investor) is only required to put up collateral, either in cash, security or a letter of credit to obtain the facility.

Apart from First Bank, one other bank was still being considered.

There are no specific numbers of firms required to operate as SLAs as long as a firm has good network and willingness to function effectively.

Requirements include strong Information technology and good network and wherewithal to function effectively as SLAs.

The appointment was meant to strengthen market making activities on the nation’s bourse.

The NSE in April, 2012 approved 10 stock broking firms out of the 20 firms that applied as market makers.

The firms are Stanbic IBTC, Renaissance Capital, Future View Securities, Vetiva Capital and ESS/DunnLoren Merrifield.

Others are WSTC, Capital Bancorp, FBN Securities, Greenwich Securities and CSL Stockbrokers.