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NSE: New market surveillance policy paying off

By on October 12, 2015

There are indications that a cocktail of policies put in place by the management of the Nigerian Stock Exchange (NSE) to smoothen market operation and to ensure market participants play by the rule are paying off with the drastic reduction in the number of infractions this year.

Meanwhile, the exchange’s brokers performance report showed that the trio of Stanbic IBTC, Chapel Hill and CSL Limited led in terms of the value of their activities on the bourse for the month of September.

The stock exchange’s Executive Director, Market Operations and Technology, Mr. Adeolu Bajomo, who spoke about reduction in cases of infractions in an interview with THISDAY, said in terms of compliance to laid down rules, stockbrokers have keyed into the recent reforms put in place by the NSE.

He disclosed that  the leadership of the exchange has decided not to heat up the polity by keeping sealed lips on sanctions meted on operators in recent time, saying it is not in the interest of the Nigerian economy to sensationalise such steps.

The quiet reforms, he said, has yielded positive returns given the ease at which operators meet their obligations unlike in the recent past. He disclosed that even those who initially opposed the reforms have fallen in line.

He said, “Part of the market is not to be sensational but our surveillance department has done a lot of work. The brokers all submitted their quarterly returns on time. Four years ago, when we started we would be lucky to get up to 20 fully complying. When we started they said it was not possible. The fine we made last year was about N89 million.”

He however, maintained that market cannot be developed by imposing fines, explaining that, “although sometimes, we have to make scapegoats. However this is not about making scapegoats, it is about encouraging right market behaviours. When you do this, the market will sit up because what you want to see is that company X has delivered his results as promised.”

He explained that the initial slowdown of trading during the year was largely caused by a number of factors that began with the removal of former governor of the Central Bank last year. Other factors, according to him, include the kidnap of the Chibok girls, 2015 election and the energy crisis.

He however maintained that some of the fears expressed over Nigerian economy were misplaced, a development he blamed on distorted information about Nigeria.

Meanwhile, the exchange’s brokers’ chat for the month of September has shown that the top 10 leading brokers were responsible for 67 per cent of the total trading, amounting to N88 billion for the period.

Top on the list was Stanbic IBTC with transactions worth N18, 633,430,431.78, representing a 14.31 per cent of total transactions for the month. Closely followed was Chapel Hill Denham Securities with N15, 961,595,915.21, amounting 12.21 per cent of the total value of trading for the month of September.

CLS Stockbrokers Limited came third with transactions worth N14, 491,424,358.23, which represents 11.13 per cent of transactions for the period.

In September, stock market capitalisation rose by N521 billion from N10.208 trillion to N10.728 trillion at the close of trading on September 30, 2015, while the NSE All-share Index (ASI) appreciated by 1,532.93 basis points or 5.16 per cent, from 29,684.84 points to 31,217.77 points, reducing the year-to-date loss to 9.92 per cent.

Market operators attributed the uptrend performance in the month of September to renewal of investors’ confidence.

They expressed optimism that the month of October would be positive as the market awaits the appointment of members of cabinet by President Muhammadu Buhari with nine-month corporate earnings expected to impact positively on the capital market.

According to them, the reduction of Cash Reserve Ratio (CRR) reduction by the Monetary Policy Committee of the Central Bank of Nigeria from 31 per cent to 25 per cent would reduce pressure on Deposit Money Banks (DBMs) liquidity since President Buhari’s directive on implementation of Treasury Single Account (TSA) in September.
The Managing Director of Enterprise Stockbrokers Plc, Mr Rotimi Fakayejo, noted that liquidity in the system had not changed but the ministers expected to be appointed in October and possible impressive results from banks earnings would resurgence investors’ confidence.

 

[ThisDay]