May 14, 2012

The Nigerian Stock Exchange presents this memorandum to the House of Representatives Ad-Hoc Committee on the Investigation of the Near Collapse of the Capital Market.  The objective of this memorandum is to enable capital market stakeholders learn from past mistakes, determine a lasting solution to restore stability in the market ,and identify ways the market can contribute to the development of the real economy. 

About The Nigerian Stock Exchange
The Nigerian Stock Exchange is a private company Limited by Guarantee.  The Exchange operates a fair and orderly market and is regulated by the Nigerian Securities and Exchange Commission (SEC).  The Exchange has a self-regulatory function as it offers listing and trading services in equities, bonds and ETFs.  There are approximately 200 companies, 56 bonds and one ETF listed on the exchange; and there are presently about five (5) million investors registered in Nigeria. 
 

Introduction 
The role of a stock exchange is one of great importance to the financial and economic well-being of a nation.  Even at the height of its boom in 2008,the Nigerian capital market was held up by a weak foundation that could not sustain the pressures of the global financial crisis.  Nigeria’s own financial crisis in 2009 shook the foundation even more, causing it to crack under the weight of the following manifest causes of the near-collapse of the market:

1.Macro-economic instability

2.Low financial literacy, market indiscipline, and the lack of investor and consumer sophistication

3. An inadequate regulatory framework

4.Corporate Governance weaknesses within the NSE.

5.    A difficult business environment and the lack of liquidity

Manifest Causes of the 2008 Crash 

1.   The global financial crisis may have played a part in the crash, but other macro-economic factors were key contributors to the never-before experienced event. 

Between 2004 and 2008, oil prices were on a steady rise. As Government spending tracked the price of oil, monthly disbursements of oil revenues flooded the banking system, driving up deposits and lending, and accelerating credit creation.  During this period, bank deposits and consumer credit quadrupled, as banking assets grew at an average rate of 76% post-consolidation.

The Nigerian Stock Exchange agrees with the CBN that Nigeria’s financial boom was too rapid for the real economy to absorb the excess liquidity from oil revenues and foreign investments in productive sectors.  This drove significant flows into non-priority sectors and into the capital markets – mostly in the form of margin loans and proprietary trading.  A number of these loans were without the appropriate regulatory framework for their operation.  As a result, the NSE’s market capitalization surged between 2004 and 2008, as the market capitalization of banking stocks grew by a factor of nine (9).  This set the stage for a sector bubble, as evidence supporting commensurate improvements in the fundamentals of the companies themselves – the banks – was lacking. 
 

2.   Low financial literacy, market indiscipline, and the lack of investor and consumer sophistication also contributed to the fall of the market. 

The capital market boom of 2004-2008 triggered an increase in retail participation.  With little-to-no experience, first-time investors poured into the market, unaware of the innate risks of investing in the capital market.  During this time (January 2, 2004 to March 5, 2008 – the peak of the market), the ASI surged 225.37% and the market capitalization for listed equities grew 841.46%.  Investment decisions were driven mostly by speculation, and easy access to loan facilities usurped the need for proper financial planning.  Low financial literacy made it easy for some financial institutions to take advantage of inexperienced investors and consumers, and as a result, market discipline was almost non-existent.  While many banking institutions had risk management processes in place, these were often overlooked in anticipation of higher returns on their investments and loans. This led to an unprecedented level of bank over-exposure and high rates of margin lending.

Under the weight of the 2008 market downturn, these practices triggered unseen rates of default.  This was further compounded by the lack of an adequate consumer protection framework to educate investment consumers on their rights.  The result was retail investors taking flight, foreign investors selling off to mitigate losses, and institutional investors getting jittery and exiting.  This caused illiquidity in both the financial and capital markets, and the near collapse of the stock market itself. 
 

3.   An inadequate regulatory framework that failed to enforce the rules of the capital market.
Inadequate disclosure by listed companies and broker/dealer firms was another key contributor to the crisis.  Reports to the NSE and the investing public were often inaccurate, late or simply not submitted.  This prevented market access to critical information that is required in making informed investment decisions.  While some listed companies did not comply with the reporting rules of the Exchange, some brokerage firms treaded a fine line from front-running, insider trading and market manipulation, to actually upholding their fiduciary responsibility to their clients.
 

 Paper-driven processes slowed down the regulatory capacity of the Exchange and contributed to the lax attitude surrounding enforcement.  While important information was sometimes released on a selective basis, some listed companies and broker/dealer firms seem to have engaged in the act of “cooking their books”.  In the case of listed companies, the result was inflated stock prices, and in the case of broker/dealer firms, misplaced trust that led to improper acts involving investors’ funds(to shore up their own investments) or to meet minimum capitalization requirements. 

These practices (and others) fueled the speculative nature of the market, and consequently, the advent of the bubble that led to the recent bear market. 
 

4.   Corporate Governance weaknesses within the NSE,  

Unstructured management and ineffective internal processes were responsible for the NSE’s lenient approach to achieving its directive to oversee the capital market – the companies listed on the Exchange and its licensed dealing members.  Corporate governance was weak as well.  The Council (our equivalent of a Board of Directors)is entrusted to carry out a specific mandate of providing an efficient market by ensuring appropriate oversight of Exchange management, but priorities may have been skewed during the boom, causing a shift in focus ,from the stability and development of the market to other non-priority areas.  Committee structures were not fully deployed and no performance management framework existed to ensure the Council’s oversight of management’s success in meeting the NSE’s objectives.  The Exchange was not adequately equipped to manage systemic risks, nor was it diligent in enforcing the rules of the market.   
 

Market compliance was deficient, supported by the lack of automated processes.  There were little-to-no analyses-based linkages between market performance and market surveillance, compliance, growing investor complaints, and market inflows/outflows – all critical to mitigating market risk.  Information from the Exchange was also scant and fell short of addressing investor fears (both locally and internationally) from the onset. Requisite analytic data for management purposes were unavailable, and market reports looked mainly at stock performance, with little attention to market trends, macro-economic shifts and risks.  Cultural nuances, and the perceived success of the market (2004-2008) impinged on good leadership, and the Exchange delayed all necessary reactions to the state of the plunging market. The ability of the exchange to oversee a fair and orderly market was put in doubt.  By extension the ability of the statutory regulator to effectively enforce its mandate was also in doubt during these heady days. 
 

5.   A difficult business environment and a lack of liquidity contributed to further embattle the capital market.
A difficult economic climate and unfavorable market conditions contributed to further eroding confidence in the market, Companies were more cautious about coming to the market, and the lack of follow through, in terms of accountability, deterred local investors who bore the brunt of the downturn.  Loan facilities dried up for businesses, market participants and investors, and despite sustaining huge losses, the legal process was not utilized to bring integrity back to the market, for lack of efficiency and affordability.

Investors lost their savings to investment decisions guided by the ‘herd mentality’ and were reluctant to re-enter the market; brokers were denied access to low-cost funds to curb risky and potentially undisciplined behavior; and quotable companies stood on the sidelines waiting out low valuations and inadequate liquidity.  This resulted in paltry levels of participation in the market that forced a market correction and the near-collapse of the capital market in 2008 through 2011.

In 2010 the SEC intervened in the management of the Exchange and instituted an Interim administration.  A new management team took over in April, 2011. 

In the 12 years leading up to the 2008 financial meltdown, the Nigerian equity market returned over 1,200%, but has struggled since then.  In 2011, the market lost approximatelyN1.4 trillion in market capitalization (from N7.92 trillion at the end of 2010 to N6.54 trillion – a 17.42% drop). We believe that these losses were driven by:

i.)  The soft global economy as a result of the financial and debt crises in the US and the European Union (EU), especially as the EU accounted for 22% of foreign portfolio investment (FPI) into Nigeria in 2011;

ii.)  The Nigerian banking crisis, including the nationalization of three banks in August of 2011;

iii.) The lack of investor confidence triggered by losses incurred during the financial meltdown of 2008/2009;

iv.) The lack of liquidity and depth in the market;

v.)  Concerns about the security situation in the country; and

vi.) Rising interest rates which saw the MPR rise to 12% in October, 2011 encouraging investors to shift to money market and fixed income investments. 
 

Recovery Road Map 2011 and Beyond 

In Q2 2011, the NSE set a broad objective to create an African institution that competes effectively in the global marketplace.  The vision to become “the Gateway to African markets” was set, supported by the main objective to achieve $1 trillion in market capitalization and to have five (5) products available in our market by 2016.  The NSE has taken strategic steps to lay the foundation for achieving this vision and objectives.

Before we discuss key initiatives the NSE has identified important initiatives driving e market’s recovery, it is important to bring to light other initiatives that are outside the NSE’s control that are equally important to developing a viable and sustainable capital market environment.  These “intervention ideas”, if successfully driven to conclusion, will be representative of the government’s formal recognition of the centrality of the capital market in the nation’s economic development plan.  These are currently being advocated by the Exchange as the government’s Market Recovery Roadmap, and they include: 
 

1)    Review of Pension Fund Administrators’ Investment Guidelines regarding capital market investments: PENCOM

-          Pension Fund Administrators (PFAs) manage the largest pool of long-term investible capital (est. >N2 trillion).  As the biggest buy-side institutions in the Nigerian market, PENCOM regulation allows them to invest up-to-a maximum of 25% of their portfolios in equities.  As at June 2011, only 17% of this capital was invested in the equities market, with short-term money market instruments taking precedence 10% currently. We recognize changes been made by Pencom.  The NSE proposes that PENCOM introduce a minimum equity allocation policy compelling PFAs to have a minimum of their holdings in equities.  The objective is to enable pension funds develop balanced portfolios that match the demographics of current pension contributors while taking into account their risk tolerance levels.  With the majority being approximately 30 years of age, and in the “wealth building” stages of their lives, a significant portion of their contributions should be invested in equities as equity markets have consistently proven to provide the largest return on investment (ROI) over the long term. 
 

This policy would also encourage PFAs to increase the scope of their investments beyond the 30 stocks the group consistently invests in, to include eligible value stocks available on the Exchange.  Furthermore, certain restrictions in the PFA investment guidelines should be revised to further enhance administrators’ access to broader investment strategies that could spur higher ROIs.  PFAs should be granted the authority to engage in securities lending, as well as the ability to invest in ETFs and other asset classes currently not available to them. 

2)    Tax Breaks on Transaction Fees and Tax Holidays for Listed Companies: FIRS 

-          Total taxes as a percentage of transaction fees are currently as high as 12%(7% in VAT and 5% in stamp duties), causing high frictional costs on transactions. This is quite significant as it does not take into account the VAT on brokerage which account for the largest proportion of transaction cost (about 52% of total transaction fees).  The NSE recommends the elimination of VAT on transaction fees as investments should not be categorized as consumer goods purchases; and the Exchange recommends the removal of stamp duty as investors buying and selling investment products are not engaging in government-related transactions.

-          Unlike other capital markets around the world, the Nigerian market provides no tax incentives for companies coming to list on the exchange.  Other nations (e.g., Kenya, Morocco, etc.) provide such incentives to encourage companies to move their businesses to these countries or to encourage them to list on their exchanges – as a means to fuel economic growth.  To maintain our (Nigeria’s) competitive advantage, the NSE is advocating that government consider implementing tax holidays for businesses that list on the NSE. 
 

3)    Policy on Listing of Large Firms with Significant Economic Impact:   FGN and NASS 

-          While companies listed on the exchange represent various industry sectors of the economy, they are not truly reflective of Nigeria’s economy, in terms of GDP. High capitalization companies in specialized sectors are not listed, and while they contribute significantly to GDP, their absence on the exchange hampers depth and liquidity in the market.  The NSE recommends the introduction of government policies that would encourage large firms in the Telecoms, Power, Agriculture, Mining, and Exploration and Production (upstream oil and gas) sectors to list, as a strategy to deepen the capital market.  Such initiatives are being pursued in other countries, including Ghana.  While the NSE has initiated talks with some of the corporations in these sectors, we believe government-backed incentives and policies for qualifying large companies (e.g., tax holidays, free land, 0% government loans, etc.) would fast-track these efforts. 
 

4)    Access to SWF Funds (i.e., inclusion of the capital market as an investment strategy): FMF 

-          As the Nigerian Sovereign Investment Authority (NSIA) prepares to commence operations, the NSE recognizes the benefits of an SWF to the nation’s economy.  A major institutional investor like the SWF can help create stability in the markets, as foreign portfolio investors, who currently comprise >80% of market activity, have proven to contribute to market volatility.  The SWF can help allay the fears of skeptics who argue that the market may not be able to absorb equity listings by major corporations, and it would play a major role in promoting greater investor confidence.

Typically, SWFs take a long-term approach to investing, where considerable investments in equities and fixed income securities are used to achieve the long-term strategic financial goals of a sovereign.  The vast majority of SWFs – including those of China, the United Arab Emirates (UAE) and Singapore – structure their holdings to include large investments in the capital markets.  For example, the Government of Singapore Investment Corporation (GSIC), considered a ‘model’ fund, invests approximately 50% of its holdings in equities, 30% in bonds and 20% in other types of investments, including real estate and commodities.  SWFs tend to purchase stock in listed companies that have performed poorly during the year preceding the investment, but stocks of companies receiving SWF investments increase significantly, by almost 1%, on the announcement of these investments. 
 

5)    Exit Strategy for Privatized Entities: BPE

-          The current government policy on privatizing government-owned entities is applauded and supported by the NSE.  The Exchange, however, believes that the strategy to afford them several years to come to market is flawed.  The NSE recommends that a portion of the shares (e.g., 20%) of all entities earmarked for privatization should be listed on the exchange at the same time they are being sold to strategic investors.  This is a strategy to improve on transparency, disclosure and good corporate governance, while providing the general public the opportunity to buy shares at the same price point as strategic investors.

This privatization “formula” has been successfully implemented in many countries over the years – e.g., Argentina, Australia, Brazil, France, Hong Kong, Ireland, India, Japan, Malaysia, Poland, etc.; it has contributed significantly to deepening their markets, and has aided greatly in the transformation of their economies.

Sinopec and Petrobras also transformed the economies of their respective countries, China and Brazil, upon listing.)

The NNPC and joint venture companies such as NDPC should be listed upon privatization. To better service such companies, the NSE recently modified its listing rules to make listing on the market more compelling, more attainable, and more cost-effective for certain types of companies, including SMEs. 
 

-          The Nigerian capital market has, over many decades, developed a peculiar focus on dividends as the basis for the measurement of the “good performance” of a company.  While the ISA 2007 maintains that Collective Investment Schemes may invest in ordinary shares of public limited companies “with good track records, having declared and paid dividends in the preceding years”,PENCOM’s rules for listed companies stocks that qualify for PFA investment, preclude all companies that have not paid a dividend within the last five years.  This narrow definition of a quality company prevents our largest institutional investors from investing in the fastest growing sectors of the Nigerian economy, as companies operating in cash intensive sectors typically reinvest their profits to meet growth demands and to remain competitive.  The NSE recommends the revision of this measurement metric at both the ISA and PENCOM ACT levels to justly increase the number of companies that would qualify for collective investment schemes and PFA investment, respectively. 

7)    Improve the Capacity of Local Institutional Investors: SEC 

-          Following the near-collapse of the Nigerian capital market at the heels of the market downturn, it is important to implement changes to better manage investors’ exposure to market risk.  The NSE suggests that the minimum subscription amount for both debt (non-sovereign) and equity transactions be significantly raised, such that only qualified institutional investors, market makers and HNIs can directly access the market.  This would prevent vulnerable retail investors lacking in-depth understanding of the risks associated with the market from directly exposing themselves without the guidance of licensed Asset Managers.  The investment strategy for such investors should be through managed funds, whereby individual stock selection is done by professionals who understand the risks inherent to the capital market. The NSE currently has 26 managed funds listed on the Daily Official List.  These funds provide exposure to various asset classes and investment strategies that meet investors’ different needs.  For the successful implementation of this initiative, the NSE would look to the SEC to further develop the asset management industry, beginning with the strengthening of licensing requirements for asset managers. The NSE has also introduced the ETF asset class (which provides exposure to a basket of underlying securities or commodities while been traded like a stock) as a cost-effective way of providing diversification. 
 

8)    Broker Margin Debt Resolution: FMF 

-          The NSE lends its support to a viable solution for the still-pending broker margin debt issue.  While a lot has been said about the moral hazard of forgiving or forbearing the debt of brokers who may have erred in executing their professional and fiduciary responsibilities to their clients, it is important to note that NSE is advocating that margin debt losses be limited to 100% of the collateral provided by brokers. This is global best practice and would have a broader positive impact on the market.  The Exchange is advocating limiting brokers’ losses to 100% of their collateral.  This recommendation is in line with margin lending best practices whereby assets acquired with borrowed funds are used as collateral for the loan, limiting the lender’s exposure and the borrower’s liability to the collateral put up for the loan. It is punitive to continue to go after the borrower (broker) for the lender’s (bank’s) exposure after the borrower has lost his collateral and the lender failed to exit the position. 
 

9)    Broker Access to Funding: CBN and SEC 

-          CBN and SEC prudential guidelines currently cap banks’ exposure to margin lending at 10% of a bank’s loan NPL portfolio.  While these prudential guidelines are in place to prevent market abuse, the NSE is advocating exemption for market makers registered by the NSE, as they carry the responsibility of maintaining liquidity in the market.  The Exchange recently appointed 10 primary market makers after a rigorous selection process.  To meet the needs of their customers (and the market), they must be able to buy securities at any time, borrow securities to meet demand at any time, and be liquid at all times to carry out their professional duties. For this purpose, access to margin loan facilities is critical to the program’s success.  We believe that the recently introduced CBN/SEC margin guidelines will be sufficient to curb the abuses of the past.  

We are confident that the implementation of these proposed government-backed initiatives, together with the following deliverables (by the Exchange), should rekindle investor confidence, enable the recovery of the market, and unlock the potential for long-term financing of Nigeria’s vibrant economy. 

In 2011, the NSE began the drive toward the market’s recovery with a focus on increasing operational efficiency, and improving market-wide transparency and corporate governance.  First on the list was the implementation of the NSE’s transformation agenda which centered on streamlining critical business areas to enable the NSE better focus its market development efforts, and address key aspects of the capital market currently impeding growth.  Important steps taken by the NSE in 2011 include the following: 

1)    New Leadership – The NSE welcomed its new Administration starting April, 2011.  Since joining the Exchange, the team has worked tirelessly to lay the right foundation for the growth and development of the NSE and the capital market. 

2)    The Council (Board) – In 2011, the National Council of the NSE welcomed a handful of new members and accepted the resignation of two other members.  The Council Committee structure was reconstituted and six(6) Council Committees were formed to guide the management of the Exchange: The Audit and Risk Management, Demutualization, Disciplinary, Finance and General Purpose, Rules and Adjudication, and Technology Committees. 

3)    Regulation and Compliance –Broker-Dealers: The NSE is enforcing the minimum capital requirement for broker-dealers, with more than 30 firms successfully meeting/exceeding the N70 million minimum capital requirements as at the end of 2011.  The Exchange has reconstituted the in-house Investigation Panel and has introduced penalties for seven (7) violations previously lacking penalties in the Exchange’s rules: Unauthorized sale of shares; Fraudulent verification of share certificates; Misappropriation of funds; False third party transactions; Failure to maintain separate client accounts; Failure to appoint a licensed Compliance Officer; and Failure to submit financial statements.  The NSE recorded 80% resolution of all complaints received in 2011; completed inspections of 50% of all broker-dealer firms; reported approximately 90% compliance for submission of financial accounts from broker-dealer firms (from 5% in early 2011); and successfully executed the first ‘Six Module’ learning program for Compliance Officers of broker-dealer firms.

Issuers (Listed Companies): By the end of 2011, the NSE reported a 96.81% compliance rate for the submission of 2010 annual accounts by listed companies, up from 64% in July 2011.  The compliance rate for companies with fiscal years ending January-to-September 2011 was 75.47%.  The Exchange revised issuer rules, and assigned stiffer penalties to the following violations: Late and non-submission of quarterly and annual financial statements; and Failure to notify the Exchange of Board changes.  The Exchange is enforcing penalties for late reporting of financial performance – 49 companies in 2011,and only 10 outstanding at the end of the year –and has initiated proactive measures to assist companies meet their reporting deadlines.  The NSE also completed the first Company Secretaries Forum, designed to ensure blanket awareness of reforms, and to foster compliance of existing rules.  We are currently rewriting the rule book to codify all policies and practices, while shedding more light on the Exchange’s activities. 

Other key initiatives the Exchange executed in 2011, and those that have been identified as critical for 2012, include the following: 

4)    Market Structure – In 2011, the Exchange identified key initiatives aimed at facilitating market growth and development.  These were:

·     Market Segmentation exercise, which enabled the NSE consolidate 33 industry sectors under which companies are listed to 12 sectors, and all companies were reclassified– Launched in 2011

·         Revised Share Buy-Back Policy which allows companies to buy back up-to-15% of their shares – Approved by the SEC and launched in 2011

·         Revised Listing Requirements – Approved by the SEC and effective April 1, 2012

·     Introduction of Market Making – Approved by the SEC and selected market makers announced on April 4, 2012

·      Introduction of Securities Lending – Approved by the SEC, pending introduction as we harmonise SEC rules with Exchange rules. 

5)    Technology – In 2011, the Exchange performed an audit on its technology infrastructure to identify opportunities for improving access to the NSE’s network. In the first quarter of 2012, the Exchange launched its low-latency, high-performance, high-capacity, low-cost broker virtual private network (VPN)Xnet.  This supports the NSE’s strategy of enabling cost effective and efficient execution of trades from broker-dealer offices.  It will form a major backbone of the ongoing technology transformation program.

The NSE began development of its next generation trading platform and supporting technology infrastructure in 2012 with NASDAQ OMX.  Implementation of the NASDAQ OMX X-stream solution will improve operator and investor experiences in dealing with the Exchange, and provide the foundation for future market development, in terms of product availability, technology alliances, etc.  The Exchange will also define and implement approaches to monetizing market data. 

6)    New Products, Liquidity and Depth – In 2011, the Exchange launched the first ETF in West Africa, the NewGold ETF.  In 2012, the NSE has  defined key initiatives, specifically aimed at developing product liquidity and depth for equities, bonds and ETFs .The Exchange’s focus will be on increasing equity, ETF and fixed income product offerings in the immediate term, with the objective to bring options and financial futures to the market between 2014 and 2016.  Such product diversification will give investors the opportunity to diversify across asset classes, while remaining in the capital market. 

7)    Stakeholder Engagement – The Exchange continues to ramp up stakeholder engagement efforts to engage with the Government, listed companies, major institutional investors (local and foreign) and key retail investors, business news outlets, regulators and market operators.  In 2011, the NSE introduced a formal bell-ringing program as a platform for celebrating capital market and listed company milestones.  These forums are a platform for providing our stakeholders with additional insight into our market reform efforts. 
 

A new Exchange Web site was launched in February 2012 as a comprehensive platform for communicating with all NSE stakeholders and providing transparency of the market, and we will continue to enhance it.    

8)    Financial Literacy – The Exchange has embarked on a massive financial literacy effort that is anchored on our investor education program. The first Investor Clinic was held in February 2012 in Lagos.  This program was customized for HNIs, and subsequent events will be held around the country.  The NSE will structure another program tailor-made for retail investors, and this program will be radio based. To support this effort, the Exchange will engage brokerage firms to improve the advisory services arms of their businesses, to align with international best practices. 

9)    Business Development and Listings – In 2011, the Exchange spent considerable resources building a pipeline of companies for listing on both its equities Main Board and Alternative Securities Market (ASeM).  In 2012, the NSE will work with issuers to list a number of these companies as conditions become favorable.

Effective April 1, 2012, the NSE released new listing rules.  The exercise supports targeted business development efforts, in terms of the NSE’s efforts to attract new companies to the exchange.  The revised rules will provide flexibility with zero compromise to market integrity, and will position the Exchange as a competitive listing destination.

The Exchange will also begin offering listed companies value-added services, geared towards providing transparency, and helping companies maximize value for shareholders.  These include services in the areas of Corporate Governance, Investor Relations, Institutional Services, Analyst Coverage and Corporate Access. 

10) Investor Protection Fund (IPF) - Pursuant to Section 197 of the ISA 2007, a securities exchange is required to establish an Investor Protection Fund to be administered by a Board of Trustees, subject to the regulatory supervision of the Commission.  The objective of the fund is to compensate investors who suffer pecuniary losses.  The amount in the IPF is N635 million, as per December 31, 2011 audited accounts. The Exchange is currently finalizing efforts to constitute a new board of trustees.  On Friday (April 27) we sent a list of nominees to the SEC for approval. 

11) IFRS, Demutualization – The NSE will begin implementation of IFRS accounting standards in 2012, and will support the efforts of listed companies and broker-dealer firms to meet the SEC’s directive for market-wide compliance in 2012.  The Exchange will also continue with demutualization efforts to enable the NSE evolve into a modern, revenue generating, commercially managed company.

Conclusion
The Nigerian Stock Exchange will emerge stronger and more focused as we drive our transformation through.  The Council and the management team will continue to champion these reforms as a means of accelerating Nigeria and Africa’s economic development.  The transformation will be accomplished with various stakeholders playing their parts, most especially government, regulators, issuers, market operators and investors. The new Nigerian Stock Exchange provides a vehicle for long-term ‘saving’ and ‘borrowing’, and hence, efficient use of financial resources.  The current market cycle presents an incredible opportunity for government to play a leadership role in revitalizing the capital market, and for investors to once again, begin to create durable wealth for themselves.