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SEC to reduce transaction time

By on April 24, 2015

The Securities and Exchange Commission on Wednesday said the Capital Market Committee was working to reduce the settlement cycle for transactions in the capital market and on other initiatives that would speed up the development of the market.

The Acting Director-General, SEC, Mr. Mounir Gwarzo, said this while briefing journalists about the deliberations at the first quarterly meeting of the CMC for 2015, which was held in Lagos.

Specifically, he said the CMC was working to reduce the settlement cycle from the current “T+3” to “T+2” or “T+1”.

Under the “T+3”, transactions carried out in the capital market is expected to be settled three days after the trade date. Reducing the cycle means that transactions will be settled faster.

As part of efforts to attract more domestic investment in the market, Gwarzo said the CMC, which comprises stakeholders in the capital market, was working to ensure that funds from transactions would be credited directly into the investor’s accounts, rather than through the stockbrokers.

The acting SEC DG, who noted that the CMC had identified some issues that would encourage more patronage by domestic investors, said, “One area that we also think will encourage investors greatly is the area of direct payment where if a client gives his shares to be sold, the proceeds of the sale would be credited into his account directly.

“So, he would have direct access to the funds. And, hopefully, our settlement system might be reduced from “T+3”, probably to “T+1” or “T+2”.”

Also related was the decision by the CMC to review transaction costs in the market. Gwarzo explained that a reduction in transaction costs was expected to boost market participation.

He said, “We believe that when we reduce some of these costs, it will propel further transactions in the market. A detailed work was done and a presentation was made and members contributed to it and a small committee would be set up. So, at the next CMC (meeting) we will able to come with an idea of what the costs in the market are going to be.”

Gwarzo said the CMC also discussed the issue of dematerialisation, which involves the conversion of physical certificates to electronic certificates, stressing that it was time to get it done.

“We all agreed by the next CMC (meeting) we should be able to come up with the final blueprint on dematerialisation, including how we are going to address some of the legacy issues,” he said.

In addition to that, he said talks were held on how to revive the corporate bond market as the bond market had been dominated by government bonds for years.

According to him, efforts are also being intensified to revive the Nigerian Commodities Exchange Market, and to ensure that more of the country’s pension funds are invested in the capital market.

On the capital market master plan, he said the plan was structured to run for the last three quarters of the year with specific deliverables and responsibilities. He said the members of the CMC were happy and pleased with the work that had been done on the master plan.

Responding to questions, the SEC DG stressed that the commission and the CMC remained committed to investor protection.

He said the commission had already taken a giant step in that regard by setting up the Investor Protection Fund, adding that it was currently verifying claims by investors after which they should be able to access the fund.

 

[Punch]