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NSE to launch DMA in Nigerian Capital Market

By on October 7, 2014

In furtherance of the plans by the West African Capital Market Integration (WACMI) to integrate stock markets in West Africa, the Nigerian Stock Exchange (NSE ) has said it plans to support Direct Market Access (DMA) as an interim step to the implementation of Sponsored Access in West African stock market.

According to a statement by the NSE, in Phase 1, brokers in WACMI member countries will now be able to trade securities and settle in markets other than theirs through local brokers in those domestic markets.

The NSE said the main objective of Phase 1 is to enable brokers that are not registered market operators in Nigeria to participate in the market by granting them remote access to the NSE’s trading facility through a local Dealing Member Firm.

According to the NSE, “With DMA, a Dealing Member Firm (Sponsoring Member or SM) can allow a Sponsored Participant (SP) to submit an order to the trading system under the member firm’s trading codes via the member firm’s order management systems (OMS). In the next sub-phase, Sponsored Access, unlike DMA, will allow a Sponsored Participant to submit orders under a Dealing Member Firm’s trading codes to the trading system without passing through a member firm’s order management systems; instead their orders pass through a series of validation checks provided by The Exchange and the orders are monitored by the member firm in real-time (i.e. Exchange’s infrastructure).

“In order to support WACMI based applications for the DMA program, the Exchange has established a comprehensive internal process to ensure seamless integration. As part of the process Dealing Member Firms who wish to provide DMA services to Sponsored Participants are required to inform The Exchange by submitting a DMA Notification, along with other required information and seek the NSE’s “No Objection” to the DMA arrangement. Any active Dealing Member firm in Nigeria that is registered with the Securities and Exchange Commission (SEC) and licensed by the Nigerian Stock Exchange can apply for Phase 1 under the WACMI program. The Dealing Member firms must have an OMS vendor that is certified by the Exchange for sub-phase 1, DMA.

Chairman, WACMIC and Chief Executive Officer of the NSE, Mr. Oscar Onyema, said recently that the integration of the markets would speed up the development of the various domestic financial systems in the region.

WACMIC is saddled with the task of ensuring successful integration of the various stock exchanges in the West African sub region.
Onyema said achieving integration would enable momentous growth in region’s markets and would attract investment flows, while creating a much larger market for local and international businesses.

“Additionally, integration will enable the movement of capital within the region, creating flexibility for issuers looking to raise capital and investors looking to invest across member states. Furthermore, integration would speed up the development of our various domestic financial systems, promoting increased competition and innovation, as well as offering opportunities for risk diversification,” he stressed.

 

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