Interview: Oscar Onyema
How have closed-end and exchange-traded funds affected investor confidence and liquidity?
OSCAR ONYEMA: A lack of asset classes was at the core of the downturn of 2009, and to recover confidence and liquidity we must diversify. We aim to have five asset classes by 2016. Next are options and futures, which will start to be introduced in 2014, after the roll-out of our new trading platform. The key is to drive risk management; we want to give investors robust products, and are trying to drive liquidity into existing product categories. Rules for market-making have been approved by the Securities and Exchange Commission and 10 market makers have been selected, while new guidelines for securities lending and short selling have been approved.
What impact do you expect the NASDAQ OMX X-stream platform to have on access?
ONYEMA: We need to move to an open trading platform with automated connections. With over 100m mobile phone subscribers in Nigeria, the potential for this is huge. Investors can use their handsets, which transmit into the trading systems of brokers linked into the exchange’s systems, with sub-second turnaround times. We have around 5m accounts in our Central Securities Clearing System, but with 40m-45m Nigerians of working age, that number should significantly increase, especially after they see how easy it is to access us. We are working with brokers to make sure they update their order management systems, talking to bandwidth providers to ensure they provide consistent transportation, and liaising with the clearing house to make sure they upgrade their systems to support fast, efficient comparisons in clearance and settlement.
How much interest is there in listing from the energy and telecoms sectors at present?
ONYEMA: With the recently renewed listing requirements, we have stepped up our efforts to get more firms on the exchange. We have started seeing results, especially among indigenous oil and gas companies. As the Petroleum Industry Bill becomes a reality, we expect interest from oil majors. We are making a case for Nigerian National Petroleum Corporation and its subsidiaries to list, as national oil companies in Brazil and China have done. The big advantage of such companies entering the exchange is the likelihood of further listings from their significant supply chains. More so than energy and telecoms, the agricultural sector is a major contributor to GDP. With a transformation to a business-oriented industry taking place, it is becoming exciting for people to invest in agriculture and we are positioning the exchange to provide a viable exit strategy.
What can be done to prevent listed companies from breaching disclosure regulations?
ONYEMA: While we retain our ability to suspend or ban wrongdoers, we have reviewed our policy to target discipline that minimises impact on trading activity and optimises public awareness. We have increased the fine from N10,000 ($64) to N100,000 ($640) for every week financial statements are delayed, made reporting track records available to the investing public, and created programmes to help companies file in a timely and adequate manner. A portal standardising reporting formats has been created and we proactively engage with firms whose reporting deadlines are due.
In what ways can regulations be amended to support the financial recovery of the broker network?
ONYEMA: The government backed the establishment of the Asset Management Corporation of Nigeria (AMCON) to aid the recovery of Nigeria’s banks, but it is critical that it does not ignore the capital markets, especially given the exposure our broker-dealers have to the banking industry through margin loans. We have been striving to limit the losses of the brokerage community to the collateral they have put up, rather than the full value lost on margin loans. We continue to advocate this, and have recently seen increased support from the Central Bank of Nigeria and AMCON.
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