The Securities and Exchange Commission (SEC) says it will relax listing requirements to encourage more listing of Small and Medium Enterprises (SMEs) on the exchange.
Mounir Gwarzo, SEC director-general, said this at the third quarter post Capital Market Committee (CMC) media briefing on Friday in Lagos, saying, “we are willing to relax some of the listing and disclosure requirements to encourage listing of SMEs.’’
Gwarzo said the Commission would collaborate with the Federal Government on issue of tax incentives and exemption for companies that want to seek listing.
The director-general also disclosed that discussions had reached advanced stage with telecommunications companies to list on the exchange.
He said the companies could seek listing without raising funds, noting that the Commission would reduce transactions cost at the nation’s bourse as part of efforts to encourage more companies into the market in 2016.
He added that arrangements were on top gear for the establishment of a new commodities exchange in line with government new economic drive to boost the agricultural sector.
All the efforts by the Commission were to boost investors’ confidence back to the market, he said, adding that the capital market would not grow without strong investor’s confidence and liquidity.
The Commission had set up market wide committee to ascertain ways to make transaction costs cheaper at the Nigerian Stock Exchange (NSE) to increase investor participation, and would commence implementation of the committee’s recommendations from 2016.
Meanwhile, the SEC said N5 billion had been earmarked for its National Investor Protection Fund (NIPF) to compensate investors for pecuniary losses.
The director-general the fund would be for losses arising from the insolvency, bankruptcy or negligence by non-broker/dealer capital market operators.
NIPF is a trust scheme established to compensate investors whose losses are not covered under the Investors Protection Funds being administered by Securities Exchanges and Capital Trade Points.
“This is a very excellent feat taken by the Commission with its little resources as it has not been funded by the government,” he said.
The N5 billion NIPF was set-aside solely by SEC, he said, but going forward the whole market would contribute to it, as the country had joined an elite group of a handful of countries with this kind of investor compensation scheme.
“While dozens of jurisdictions have functional investor protection funds run mainly by exchanges and their dealing members, Nigeria is now among only a few countries to have a National Investor Protection Fund,” he said.
He said that investor confidence suffered since the 2008 financial crisis from which the Nigerian stock market lost 70 percent of its value.
Gwarzo said that investor confidence and the prevailing macroeconomic environment had been a major impediment to market recovery.
He said that the fund was established to strengthen investor confidence because investors were equally critical for financial system stability, saying, “this is why the protection of investors is a cardinal goal of securities regulators world-wide.”
He said that the former board of the commission approved the establishment of the Fund and earmarked resources to serve as its take-off grant in 2011.
According to him, the NIPF was incorporated on March 9, 2012, as a company limited by guarantee, “to give effect to the establishment of the Fund, the commission, on April 15, 2015, promulgated and approved rules to guide the implementation of the fund.”
The director-general said that the commission would continue to pursue initiatives that would strengthen investor confidence to boost market liquidity.
