SEC, NSE, CSCS, others consider e-IPOs for Nigeria’s financial markets

A committee comprising of the Securities and Exchange Commission (SEC), Nigeria Stock Exchange (NSE), Central Securities and Clearing System(CSCS), and six other organisations have been set up to work out modalities involved in issuing Electronic Initial Public Offers (e-IPOs) in Nigeria’s financial markets.

e-IPO is an application and browser-based software that facilitates online offerings to the public on a private company’s stock. Such company can thus raise money by going public through a cost-effective and comprehensive benefit that an e-IPO offers.

Mary Uduk, the ag. the director general of the SEC, announced Friday that the e-IPO committee was set up in Lagos last week during the first Capital Market Committee (CMC) Meeting.

Other organisations involved in the e-IPO deliberations include, Association of Issuing Houses of Nigeria (AIHN), Association of Stock Broking Houses of Nigeria (ASHON), Institute of Capital Market Registrars (ICMR), Capital market Solicitor Association(CMSA), Fund Managers Association of Nigeria (FMAN), and Nigerian Interbank Settlement System (NIBSS).

According to Uduk, globally, capital markets are moving towards e-IPO and the Nigerian Capital Market is working to adopt this trend.

Uduk who briefed pressmen alongside Isiaku Bala Tilde, ag. executive commissioner, operations; Henry Adekunle Rowlands, ag. executive commissioner corporate services; Reginald Karawusa, ag. executive commissioner, legal, and enforcement on the resolutions of the CMC meeting said the issue of increase in delistings by public companies was highlighted and recognised as a threat to the growth and development of the market.

In a bid to curb the trend the Ag. DG noted that “In view of the fact that quite a number of them are highly capitalized companies. We are expecting the committee on listings would come up with strategies to attract new listings.”

Towards strengthening the capital market, Uduk explained that the extension of a forbearance window to investors on multiple subscriptions and forbearance for shareholders with multiple accounts will last until September 2018.

“Registrars have acknowledged that investors have started coming forward but there are challenges in the process. The CMC deliberated and recommended the appropriate Technical Committee to seek input and come up with recommendations to address the challenges. Therefore, we encourage all affected investors to come forward and take advantage of the window before the new deadline.”

Speaking on Direct Cash Settlement (DCS), Uduk said that out of 5.1 million accounts with the CSCS, only 1,191 have Direct Cash Settlement (DCS) subscriptions and only 15 out of 18 settlement banks have contributed to the DCS initiative.

“Considering the fact that DCS will instill confidence in the market, there is the need for all parties involved in the process to work harder to achieve a 100% migration.” She said.

On the issue of the commodities market, Uduk said “The Technical Committee working on developing a vibrant commodities market for Nigeria presented its report at the meeting. The report will be exposed to the public to elicit comments and inputs from all stakeholders. She added that “the Technical Committee on Non-Interest capital market reported that the first sovereign sukuk was issued in 2017 and about 1,600 retail investors invested N5 billion on the instrument. The next level of engagements is to work with supra-national entities (such as IFC, AfDB), state governments, institutions (such as Federal Mortgage Bank, NMRC) to include sukuk options in their capital investment plans.

“The Technical Committee on E-dividend registration reported that the total approved mandates currently is about 2.5 million translating into 466,000 unique investor accounts. The deadline for the free e-dividend registration was 31 March 2018 and that has not changed. The new direction of the industry is that bank managers along with registrars will charge a token sum of N150 per mandate.

The Commission also warned the public to exercise extreme caution with regards to cryptocurrencies as a vehicle of investments, as part of its investor protection mandate. The warning was particular, especially as none of the persons, companies or entities promoting cryptocurrencies has been recognized or authorized by SEC or by other regulatory agencies in Nigeria to receive the deposit from the public or to provide any investment or other financial services within or outside Nigeria.

Other deliberations and outcome at the CMC meeting include an update of the Commission’s database for registration and functions of Capital Market Operators (CMOs), which can be found on the SEC website, the issuance of a new set of Registration Certificates to operators without expiry dates, made available at the SEC’s head office and Lagos Zonal Office and the commencement of the distribution of electronic annual accounts of public companies.

On financial inclusion, the ag. DG said that the commission is working with National Educational Research and Development Council (NERDC) to institute a stand-alone capital market curriculum for basic and senior secondary education in Nigeria. “To this end, trade groups made commitments at the meeting to support this initiative.”

By Afolabi Adesola