Demutualization of NSE: Innovative Products Key to Deepening Capital Market

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Tuesday, March 23, 2021 / 12:21AM / Ottoabasi Abasiekong for WebTV / Header Image Credit: LCFE


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With the Demutualization of the Nigeria Stock Exchange (NSE) concluded, innovative products that appeal to millennials and attract retail investors will go a long way in deepening the capital market.

 

Mr. Patrick Ezeagu the Chairman of the Association of Securities Dealing Houses of Nigeria (ASHON) made this point in a conversation on the "Post-Demutualization of NSE: Opportunities for the Capital Market".

 

Ezeagu noted that the process for demutualization took over 7 years before actualization and commended all the stakeholders involved for their resilience.

 

He said Nigeria now joins the ranks of South Africa with demutualized exchanges and opens opportunities for the growth of a more integrated African capital market.

 

According to him demutualized exchanges especially in Africa, could collaborate and operate as a single hub to attract capital and investments.

 

Speaking further he said brokers have to be innovative and strategic in developing products that appeal to all classes of investors and can improve the capitalization of the exchange.

 

The Chairman of ASHON agreed that the "Demutualization of the NSE" will improve the market in areas like technology, human capital, and processes.

 

"The three subsidiaries formed as a result of the demutualization of the Exchange are the Nigerian Exchange Limited (NGX), NGX Regulation Limited (NGX REGCO), and NGX Real Estate Limited  (RELCO), would bring efficiency to the market and make the exchange focus on its core mandate," he said.

 

He added that Africa needs a connected capital market that can compete globally with the dispensation of the AFCFTA (African Continental Free Trade Agreement).

 

Looking at the sub-region he pointed out that there has been an existing model of the West Africa Market Integration, WAMI which can be expanded to the entire continent.

 

The capital market trade group leader said with the demutualization of the Exchange it was possible to achieve a market capitalization of about $200bn by 2022.

 

He advised the Federal Government to leverage the capital market to raise funds, liberalize state assets and corporations to be profitable ventures.

 

The Nigerian Stock Exchange (Formerly Lagos Stock Exchange) was founded on 15 September 1960 and began operations on 25 August 1961.

 

In a bid to catch up with the needed efficiency to take its place as the leading Exchange on the African continent, members had agreed at an Extraordinary General Meeting in 2017 to demutualize the Exchange. A decision that became more pronounced as the demutualization bill became law in August 2018. Demutualizing the Exchange changed it from its earlier status as a non-profit organization limited by guarantee into a public company.

 

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