CIS Tasks CBN On Capital Market Liquidity

• Seeks robust policies, operational guidelines

BY CHINYERE OBIORA, LAGOS – The Chartered Institute of Stockbrokers (CIS) has challenged the Central Bank of Nigeria (CBN) to formulate policies that will drive more liquidity into the hands of equity traders as part of measures to reduce the huge negative impact of coronavirus on the nation’s capital market.

The President of CIS, Olatunde Amolegbe said stability and growth of equity market will catalyze overall market rebound and economic growth.

“Given the importance of the capital market to Nigeria’s economic growth and development, especially in the areas of structural development and expansion of local industry, it is pertinent, more than ever before, for the federal government to give frontal support to the market, the Central Bank of Nigeria and banking system should at this time support the capital market through provision of trading liquidity”, Amolegbe said

He however, said to ensure stability and sustainable growth in the sector, the nation’s banks must be ready to offer significant concession to capital market operators, through margin facilities and other lines of credits for trading.

Speaking during a virtual seminar on “mitigating the impact of COVID-19 on the Nigerian Capital Market”, Amolegbe said the policies and guidelines should also be strengthened towards restoring banking stocks to the marginal stock list.

He noted that the pandemic has reduced income prospects for capital market operators and purchasing power for investors and threaten capital market literacy drive as well as worsened funding challenges of CIS.

The CIS boss said the virus slowdown the key market growth initiatives such as demutualisation and review of various capital market related legislation by the National Assembly.

According to Amolegbe; “The Nigerian capital market was substantially challenged even before the coming of Covid 19 pandemic, the equity market which drives performance of the other market segments had been characterized by low investors patronage and low trading liquidity ever since the global financial crisis that hit Nigeria in 2008.

“The coronavirus has only worsened the situation, even as it also confirmed the market’s resilience enabled by the world class structures now in place.”

Amolegbe however stressed the need for capital market operators to, on their own part, keep pace with emerging technology and embrace the new order of business which is essentially defined by online remote operation.