October 02, 2019 / 1:10PM / Bukola Akinyele for Proshare WebTV / Header Image Credit: @NASDNG
The prospects for deepening the activities of the unlisted securities market in Nigeria, came to the fore at a recent stakeholders forum hosted by the NASD OTC Securities Exchange.
The forum was an opportunity for stakeholders to explore how the adoption of technologies like blockchain could deepen activities in the Unlisted Securities Market (USM).
Giving his opening remarks the MD/CEO of NASD OTC Plc Mr Bola Ajomale said the forum was designed to give the capital market operators insight into the strategy and plans of the Exchange in the years ahead.
The forum, a quarterly platform, discussed developments in the Capital market as it affects trade transactions and market performance and outlook.
Ajomale stressed that the forum was an avenue for stimulating thoughts on the direction of the USM market against broader economic indices .
He noted that the NASD was focused on driving efficiency and valuable market services, through innovation and smart technology especially in the era of a fourth industrial revolution.
"There is so much we can do, imagine where small businesses can raise funds and make transfers abroad using bitcoins" Ajomale said.
The Head, Legal and Compliance of the Exchange, Ms. Ifeoma Uba-Onubogu, in a presentation, gave an overview of the operations of the NASD since inception.
According to her, the industry started in the 1990s as an association of securities dealers with the primary objective of being a self-regulatory organization (SRO) that would govern trading on listed securities.
In 2011, NASD became a public company and in 2012 obtained its licensed on Securities Exchange and Commission which enables them to run a formal over the counter, OTC market for trading in unlisted securities.
Ifeoma Uba-Onubogu informed stakeholders that the focus of the exchange is trading in equities and expanding its other product offerings, which will allow the NASD to embrace other innovative products.
She said the vision of the exchange remained to be the hub of first call for capital formation and liquidity in West Africa, while the mission is creating liquidity transparently.
Giving further insight she explained further that the industry runs a well regulated market with over 200 authorized traders registered in their market, and over 100 participating institutions such as brokers, brokers dealers, custodian and issuing houses, including 6 settlement banks and daily operation of 10am to 6pm.
She also highlighted the fact that the exchange operates a T+3 settlement system and conducts daily market surveillance, that rests on a credible platform for investors and capital market operators.
In terms of the trading platform, the Head, Compliance of the Exchange, said there is a web-based trading platform that is fully traded with cloud facility that allows market participants and investors to access data and trade from any smart device.
According to her the exchange recently launched a trading mobile App to enhance its operations.
"As part of our compliance process, to register as a participating institution with the NASD you must satisfy us that you are diligent to start as an entity in the corporate affairs commission, CAC and must have been registered with the Securities and Exchange Commission and other securities market in the country" She said.
In her remarks the Head of Operations and IT for the Exchange, Chinwendu Ekeh, said after the Exchange migrated to the B-platform which is a Lite platform fit to scale that matches the market, prices went up which led to a model that was set up to curtail the market observation.
The B-Platform according to her was designed to avoid any tendency of price manipulation, and is a bi-lateral trading platform that empowers the broker to pick the deal he or she wants.
In terms of efficiency Ekeh said the Platform was tested with January to May, 2017 and January to May, 2018 timelines which led to the development of "ViewApp" designed with a 5- business day model instead of using a daily number.
On the portal she said it was a web repository that gives access to all information from inception such as price historical, trends and analysis. She added that it provides real time information with feature of live trading which can be monitored.
Talking about the recently launched mobile app in July 2019, she mentioned the availability on Google Play and assured the brokers that the IT team is working to constantly upgrade it for seamless operation.
"NASD has also been able to come up with NASD Enterprise Portal (NASDep) a primary side of their market that is technologically driven to serve as an exchange for Micro, Small, Medium Enterprises to provide a portal where companies seeking for funds can register and link with investors looking for companies to invest in.
Mr. Enitan Pascal Odogun , ACIS in his presentation on Blockchain and Cryptocurrency Assets said blockchain serve as a shared registry that could potentially reduce the number of intermediaries and participants in the market.
"The process of application, trading and listing can take less time if everyone understands the process of blockchain and are in agreement" Mr. Odogun said.
He stressed that the purpose of the blockchain is to create electronic decentralized money which is money with algorithm supply.
He said decentralized custody makes it possible for an individual to have total ownership and control of crypto assets, which is used as a crypto wallet that has a public and private key.
Odogun noted that 60% of bitcoins could not be accounted for or accessed as the owners are either dead or have misplaced their private key.
Speaking on the advantages of blockchain, he said it is not time consuming, has a fast procedure with one or less intermediaries, a shared registry, provides a platform to raise capital and securitization among others.
He asserted that blockchain was good for retail investors that need to be active in the investment space, because it is an open market and with two clicks and a wallet can be created.
Speaking further he added that the economic incentives around how to have payment finality on blockchain and creating orderliness, whilst protecting investors is the future of blockchain finance in the market.
Limitations identified by Odogun for blockchain include; limitations in terms of scalability, consumer protection and standardization. He stated that the World Bank has designated a laboratory to examine cryptocurrency for financial institutions.