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NCM 2020: Top Ten Moments in the Nigerian Capital Market in 2020

Capital Market	722 VIEWS
Capital Market
722 VIEWS

Sunday, February 21, 2021 /05:00 AM / By Proshare Research/ Header Image Credit: EcoGraphics

Below are the top ten identified moments in the Nigerian Capital Market during the year 2020.

1. The Launch of the IPO Portal

The Nigerian Stock Exchange (NSE) announced the official launch of X-PO, an online platform for the subscription of public offerings (POs) on Friday, December 18, 2020, following the "No Objection" letter received from the Securities and Exchange Commission (SEC).

While we laud this step taken by the Exchange, it is important to state that the URL to the portal was not provided in the official communfication from the Exchange on the launch and no response was received after many inquiries.

2. Growth Board

Following the launch of the Growth Board on January 29, 2020, 10 months after, the NSE migrated four companies from the ASeM Board to the Growth Board on November 30^th, 2020, and also launched the associated Growth Board Index the same day.

The four companies migrated are Chellarams Plc, Living Trust Mortgage Plc, McNichols Plc, and The Initiates Plc while the Exchange remained silent on what will eventually happen to the ASeM Board which currently houses companies that hardly record movement in the share price.

3. Demutualisation of the Exchange

The demutualization of the Exchange which started far back from the period of Prof. Ndi Onyuike Okereke was in office as the DG of the Exchange seemed to move faster in Year 2020 as NSE Members assented to the demutualization resolutions reached the COM and EGM held.

Also, the Exchange announced the Chief Executives of the emerging entities from the demutualized Exchange, a move that confirmed that the process will be completed soonest.

4. Remote Trading During Lockdown

The Nigerian Stock Exchange (NSE) following the outbreak of the COVID-19 pandemic by activating a 30-day remote work plan.

Following the lockdown announced by the FG, the NSE sustained its remote trading activities.

This step by the NSE is commendable. The market witnessed some improved trading activities during the lockdown as market data suggested thus.

5. NSEASI Crosses 40,000 Basis Point

The NSEASI crossed the 40,000 psychological line in the year 2020. This is a feat last achieved in May 2018. It thus culminated in a +50.03% growth in 2020 after recording two consecutive years of losses.

It is important to state that this critical moment in the Nigerian Stock Market occurred in Q4 2020 as market YTD return was in the negative territory till the end of Q3 2020.

6. Increase in Stamp Duty

The market was notified that effective December 7^th, 2020, CSCS will adjust its system to implement the automated deduction of the Stamp Duty rate of 0.08%. The rate was formerly put at 0.075%.

This is a fallout of a public notice issued by the FIRS itemizing Contract Notes at an ad valorem rate of 0.08%.

While this is expected to translate into a little increase in market transaction charges, we want to encourage market regulators and government representatives to take a second look at this as markets in other climes are already talking about e-market activities with zero charges.

7. The Constitution of the Investment Security Tribunal/SEC Board

The finance minister during the year 2020 constituted the board of the Investment and Securities Tribunal (IST).

This move by the Honourable Minister is commendable because one of the key functions of the IST borders on investors protection which is a core mandate of the Securities and Exchange Commission.

8. Virtual Meeting/AGM

The COVID-19 pandemic and subsequent guidelines issued by the NCDC on social distancing changed the way AGMs were held in the year 2020.

The Corporate Affairs Commission (CAC) issued guidelines on holding of AGMs public companies using a proxy. Guaranty Trust Bank Plc was the first quoted company to adopt this approach in March 2020.

9. Re-introduction of Fixed Income Trading Fee

The Nigerian Stock Exchange (NSE) notified the market in September 2020 that it will re-introduce trading fees for securities traded in the fixed income market. The trading fees are fixed at 0.005% for buy and sell transactions.

This might become necessary for The Exchange to re-introduce the trading fees for fixed income securities because more companies in recent times continue to trade and raise funds in the fixed income market.

Also, as the Exchange moves towards a demutualised entity, it will serve as a source of additional revenue.

10. NASD Migration to a New Trading Platform

The NASD in November 2020 announced the migration to a new trading platform. The new trading platform is referred to as N-ETS and brings more functionalities to ensure a more efficient trading experience for market participants.

Also, it enables trading of new asset classes which erstwhile were not available in the OTC market.

Specifically, the platform provides an automated matching engine; Multi Securities Support; Order and Quote market models; Order Management gateway & routing support; Centralized order management; Secure Data Interchange; Standard Messaging for Market Data OMS, and User-Friendly Interface.

Do feel free to share your opinions/observations and feedback with us vide content@proshareng.com and/or research@proshareng.com

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