SEC’s policy on exchange stratification suffers heated debate


By Chioma Obinagwam

Stakeholders of the Nigerian capital market have expressed mixed feelings over the Securities and Exchange Commission’s(SEC) move to stratify the requirements for setting up more exchanges in the country.

Recall that at a press briefing held in respect of the fourth quarter Capital Market Committee(CMC) held in Lagos recently, the Director General(DG) of SEC, Mounir Gwarzo disclosed that the  Commission is working at stratifying the requirements for setting up an exchange to enable companies with such intentions participate.

This, however, gave rise to heated debate among stakeholders.

A shareholder under the aegis of Renaissance Shareholders’ Association of Nigeria, Olufemi Timothy argued that it is a way of reducing the capital market to a casino.

“It is not the solution to the problems facing the capital market. It’s an extension of making our market a casino,” Timothy lamented.

Although SEC’s rationale for stratifying the requirements includes relaxing the rules that hitherto was restrictive, Timothy said the Commission should rather focus more investigating operators, whom he alleged to be responsible for the manipulation of the performance of the capital market through their nefarious activities.

Timothy, who is also the president of the shareholder group, advises that efforts should be geared more at restoring investor confidence in the market rather than increasing the number of exchanges in the country.

Corroborating with the SEC, the Customer Relationship Officer of Foresight Securities, Charles Fakrogha believes that relaxing the rules to encourage the proliferation of exchanges is a step in the right direction.

Fakrogha, who is also a stock analyst, is of the opinion that giving opportunities for the set-up of more exchanges, which he refers to as Capital Trade Points would mean more access for the investing public and would lead to more capital market inclusion.

“The creation of new exchanges? it is what is happening in other climes. I call it Capital Trade Points. We had it in the past but they were shut down because they couldn’t meet the requirements. For me, they should go back to what was in place in the past but this time, they should carry the government along, particularly, the state governments,” he suggested.

Instructively, the analyst noted that states who would delve into the Capital Trade Points project, should ensure that they are sustainable in addition to making certain that they meet the objectives, which includes increasing retail investor participation in the capital market.

However, despite the NSE already having a stratified market- the Premium board, the Main board and a near moribund Alternative Securities Market(ASeM) board, yet still struggling to achieve increased retail participation, which is still very low at two per cent.

SEC, the capital market’s apex regulatory body, ought to look beyond creating opportunities for setting up more bourses in the country to restoring investors and stakeholders’ confidence in the capital market, which has been very much eroded.