Stakeholders List Benefits Of NSE Demutualization


Tuesday, March 03, 2020 / 11:00 AM / Ottoabasi Abasiekong for WebTV / Header Image Credit: WebTV


The Nigerian Stock Exchange (NSE) yesterday held a court-ordered meeting and extraordinary general meeting, to set the pathway for achieving full demutualization of the Exchange.


At the end of both sessions, the Acting Director-General of the Securities and Exchange Commission (SEC), Ms. Mary Uduk, President of the Council of the NSE, Otunba Abimbola Ogunbanjo and the CEO of the NSE Mr. Oscar N. Onyema in separate interviews with Proshare WebTV listed the benefits of the "Demutualization" exercise.


The Ag. DG of SEC Nigeria, Uduk, described the overwhelming votes and adoption of the scheme for demutualization as a historic day for the Nigerian capital market.


She acknowledged the fact that a lot of demutualization exercises have happened across the globe and for those jurisdictions where it occurred, there have been positive effects on the market and economy.

According to her, "Demutualization will transform the operations of the Exchange, separating it into the regulatory and the business venture segments."

Speaking further, she said the Exchange would eventually list on the market, which is when the SEC Nigeria will begin to provide revised market oversight.

She noted that when the Demutualized NSE is listed, effective regulations would be in place to ensure transparency, meaning a Chinese wall would exist to ensure the protection of investors.

Ms. Uduk assured the market that SEC Nigeria would ensure that proper corporate governance is entrenched by the Exchange, to calm the fears of local and foreign investors.

The President of the Council of the NSE Otunba Abimbola Ogunbanjo, on his part, defined "Demutualization" as the decoupling of the membership rights and ownership rights in the Exchange. 

According to him, before the demutualization process, the Exchange had only the dealing and ordinary members; this structure will now change.

Otunba Ogunbanjo listed the following as benefits of demutualization of the NSE;

  • Enhanced performance
  • Improved  competition
  • Deepening of the market
  • Greater attractiveness to foreign investors
  • Greater flexibility in products developed by the Exchange

The CEO of the NSE believed the demutualized Exchange would run like any other corporate entity, having a board and being driven by global best practices corporate governance

He added that through the restructuring exercise, the Exchange would implement a new business plan that would allow the new entity to access all forms of capital that is available to it both domestically and internationally.

Onyema said the intention was to have the best technology and people onboard at the Exchange.

"Demutualization is modernization, and if you look at other Exchanges that have achieved this globally, they have been able to venture into new frontiers," he said.

Speaking further, he noted that demutualization would provide for the de-risking of the Exchange's operations and activities in the Nigerian capital market.

"Right now, there is a huge emphasis on the banking sector as a source of funding, but with this effort, we believe we ould provide a credible complement to the banking industry in terms of financing business activities," Onyema said.

Onyema believed that demutualization would have a beneficial impact on the capital market and the Nigerian economy in general.

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