Barring any major change in plan, securities lending would commence in the nation’s stock market in the first quarter of 2012, THISDAY investigations have revealed.

Securities lending is the act by which one party (broking firm) give lend securities to another (broking firm) who must eventually return the same security as repayment. Securities lending allows a broker in possession of a particular security to earn enhanced returns on the security through finance charges.

And this is one of the ways the management of the Nigerian Stock Exchange (NSE) hopes to deepen the market and make it more attractive to investors.

THISDAY had reported that the rules and regulations for securities lending were ready and waiting for the approval of the Securities and Exchange Commission (SEC).

To reinforce the urgent need of having securities lending in the market, the NSE, Chartered Institute of Stockbrokers (CIS), Association of Stockbroking Houses of Nigeria (ASHON) and Association of Assets Custodian (AAC), have worked out a document to advise SEC on steps that should be taken to ensure securities lending in the market.

Chairman of AAC, Mr. Segun Sanni, who disclosed this new move, noted that if the document was favourably considered by the apex regulator of the capital market, securities lending should begin in the first quarter of 2012.
“We are optimistic that if the document is considered, we should be able to have securities lending in the market by the first quarter of 2012,” Sanni said.

Speaking on the deepening of the market, the Chief Executive Officer of the NSE, Mr. Oscar Onyema, had said it was one of the priorities of the Exchange and would be done through the introduction of new products.

“Our equity market is still rudimentary, it is not a complex market. There are so many things we can do to bring the equity market to the next level. We can introduce transactions analysis, do statistical arbitrage. But we have to take one step before we run. But if you never take that first step, you will never run,” Onyema said.

And the NSE last Monday listed the first ever Exchange Traded Fund (ETF) to be launched in West Africa. The product is known as NewGold ETF, it was out together by ABSA Capital Limited, South Africa and Vetiva Capital Limited.

Onyema stated that the NewGold ETF was the third largest Gold ETF in the world, adding that the listing would allow both individual and institutional investors direct access to an efficient and cost effective way to invest in gold through a listed security.

He noted that the exchange traded fund was the first of the new products planned by the NSE as part of the on-going transformation of the Nigerian capital market, which requires expanding from the current state of two products-equities and bonds.

“The Nigeria listing is anticipated to help advance the investor market in one of Africa’s fastest growing economies by broadening the choice of asset classes open to local investors and increase appreciably, the liquidity on the Nigerian Stock Exchange, Onyema said.

He noted that the ETF would help investors focus on what was most important, the choice of asset classes.


source:www.thisdayonline.com
By Goddy Egene