*Bemoan Alleged Stalling of Scheme by National Assembly
Bright Nwogwugwu
Capital market stakeholders in the country are insisting on the introduction of electronic transaction (e-transact for short) while condemning alleged moves to get the National Assembly to halt the machinery put in place to guarantee seamless transactions through an all-encompassing electronic option in the market.
One of them, Mr. David Andory, General Manager, Lambart Securities Limited, told M2 that e-transact has become a major benchmark for determining the efficacy and vibrancy of capital markets around the world and that the Nigerian market cannot amount to much without it, in time to come.
His words: “We have no option than to adopt it, as it has become entrenched in the corpus of global best practices as far as capital market operations are concerned. We must align ourselves with it, otherwise the system will become more susceptible to setbacks.”
Continuing, Andory said that the onus lies on the Nigerian Stock Exchange (NSE) and the Securities and Exchange Commission (SEC) to insist on the electronic option for all capital market transactions.
“It behoves SEC and NSE to take a resolute stand on the policy. As a matter of fact, if these regulatory bodies insist on the migrating to the virtual channel of e-business come next January, all operators must comply,” he stated.
Commenting on the gains accruable from the introduction of e-transact, as being canvassed by the management of the NSE, and the purported moves against it, a frontline capital market analyst, Mr. Ifeanyi Onyenma said: “There are some cabals that are making huge gains from the inefficient manual system of transaction and they are likely to do everything in their power to frustrate the move by the authorities to phase out manual transactions in the capital market. Besides, we have not seen real sincerity on the part of the authorities themselves. If they are really sincere, they need to sensitise the public, and to do that, they ought to go beyond the AGM platform and make good use of the mass media print, electronic and outdoor. This is how they can get more people to know about CSCS accounts and the relevance of the coming electronic transactions regime.”
Explaining the likely forces militating against the e-transact alternative being brought on board, Onyenma, Director, (Research and Training), Financial Edge, said that stock broking firms, registrars and banks could be culprits.
“Stock broking firms charge various amounts to verify certificates,” he said. “Registrars and banks are also not left out in the whole business. Most times, registrars unnecessarily raise the issue of inconsistent signatures and refer investors, who want their certificates verified, to banks for confirmation. Now, to get a banker's confirmation, which becomes a sine qua non for verification of certificates, you pay as high as N2,500. And this is something that ideally shouldn't cost you a dime because you operate an account with the bank. So, with the kind of money these people are making from the on-going manual process of transactions, it might be difficult for them to support or accept the dematerialisation of certificates and all that.”
Onyenma, however, expressed the view that its far-reaching benefits notwithstanding, the all-round electronic option, when fully enforced, would have an adverse effect on the prices of stocks on the floor of the Exchange.
“I think it is also important to note that if the capital market regulators begin to electronically credit the CSCS accounts of investors, who bought IPOs, now that the market is bearish and in need of liquidity, prices of equities will further nosedive. Many investors will rush to sell off their stocks as soon as their certificates are verified and de-materialised. And because when supply is much more than demand, prices fall, we expect to see worse times than this,” he said, recommending that in the interim, NSE and SEC could hold on until the bull returns.
NSE Director General, Prof. Ndi Okereke-Onyuike, recently decried the attempt by some unidentified groups to lobby the National Assembly into stalling the intended electronic alternative for all capital market transactions. She had faulted the argument that there is no feasible framework which would guarantee a mass appeal for the electronic business medium.
“The infrastructure is not there. It is not for everybody to invest in the capital market for now. Because of environment, people raise the issue of rural penetration. There are other investment windows; the capital market may not be for everybody for now,” Okereke had said. “The market has been ready for 11 years. There is no way we can continue to hold on. Anybody that cannot agree with the methodology of the market has the right to get out, as there are other investment options apart from the market,” she added.
Reacting to Okereke's position on the issue, Mrs. Biodun Gbadegesin, an investor, pointed out that the name 'Nigerian Stock Exchange' implies that every Nigerian is entitled to play in the capital market, and should not be denied the opportunity. She advised that appropriate structures be put in place before a certificateless process is brought on in the capital market.
“It would not make much sense if the movement from a manual business model to an electronic system is made to favour only few categories of investors. The haste to transit, without relevant structures on ground, is uncalled for,” Mrs. Gbadegesin stated.
*Bemoan Alleged Stalling of Scheme by National Assembly