November 30, 2011
The Nigerian Stock Exchange (NSE) has said it would intensify efforts in the dematerialisation of share certificates in the stock market as a way of improving liquidity in the market.
Dematerialisation is the conversion of share certifications from paper form into electronic form. While some investors have dematerialised their shares and have them safely kept in the Central Securities Clearing System (CSCS) Limited, many are yet to do so due to ignorance and other factors.
However, the Interim Head of the Council of the NSE, Mallam Ballama Manu, said that in the coming year, the Exchange would collaborate with CSCS and Securities and Exchange Commission (SEC) to ensure full dematerialisation of share certificates still being held outside CSCS.
In his report to members of the NSE, at the 50th Annual General Meeting (AGM) held recently, Manu added that full dematerialisation would be one of the major issues the Exchange would be dealing with in the new year.
According to him, how to broaden the market would be the general focus of the Exchange going forward.
“We will also focus on the introduction of market makers, which would bring some fundamental changes in our trading processes as well as licensing of Designated Advisers, who will anchor the operations of the Alternative Securities Market (ASEM).
“The Exchange will also be working on the provision of alternative capital raising mechanisms that will deepen the market and improve liquidity. Others are: resolving the issues surrounding stock lending and stock borrowing to allow these activities debut in our market; Extending and deepening existing partnerships with other Exchanges on the continent and other parts of the world,” he said.
Speaking on market outlook, Manu said the Exchange expected that some manufacturing companies to beef up their capital bases using instruments available in the market, particularly rights and medium tenor bond.
He assured stakeholders that the existing market infrastructure remained sound and capable of meeting the current needs of investors, issuers of securities and market operators.
Commenting on the performance of listed companies, Manu said that the harsh operating environment led to mixed performance by companies.
“Declining incomes and savings attributed to rising unemployment, weakened purchasing power arising from inflationary pressure, and investors' apathy caused a decline in the participation of Nigerians in the stock market. Similarly, the rise in interest rates especially during the fourth quarter, profit taking and absence of margin facilities exerted downward pressure on the stock market,” he said