Market Operators Demand Single License from CBN, SEC To Boost Activities
BY CHINYERE OBIORA, LAGOS – Operators in the Nigerian capital market said a single dealing license from the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) to access Discount Window will facilitate robust and deeper financial market activities in the country.
Currently regulated by SEC only, the operators are cut out of the Primary Auction Market for Treasury Bills issued by the CBN.
Speaking on the theme: ‘Deepening the Nation’s Capital Market for Economic Growth’ at the annual workshop of Capital Market Correspondents Association of Nigeria (CAMCAN) in Lagos, Group Managing Director of Dunn Loren Merrifield, Mr. Sonnie Ayere, said the access will boost liquidity for the market operators.
He stated that the reform will provide a much stronger platform for market-based financial intermediation to thrive as well as ensure they are well capitalised and regulated.
Ayere, who is also the President of Association of Issuing Houses of Nigeria, explained that issuance of a combined Capital Market Dealing License will reduce the numbers of licenses being issued by regulators and supervisors in the sector.
“We are proposing that the CBN should allow capital market institutions with the requisite capital (as agreed by CBN) access to Primary Auctions on behalf of themselves and their customers”, he said
According to him, “Discount Window access can then be given to such operators to be able to discount for liquidity purposes all instruments normally acceptable to the Central Bank of Nigeria.”
Ayere said the apex bank should not focus only on commercial banks, even as he noted that the combined capital base of issuing houses and stockbroking firms is not comparable to the capital base of a smallest bank in the country.
In his remarks, the Vice President and Divisional Head, Corporate Planning, Kaodi Ugoji noted that the country has unfortunately been affected by illiquidity; lack of regulatory framework; and high focus on reisk-free securities.
Also speaking on the same theme, Ugoji stated that due to illiquidity in the market, companies are borrowing short term funds to finance long term projects, stressing that there is an urgent need to introduce measures aimed at enlarging the domestic institutional investors’ base, particularly through pension sector reforms.
She said the importance of a strong and viable domestic capital market as an alternative source of finance in emerging economies has been affirmed by the success it has enjoyed in countries such as Brazil, Malaysia, Russia, India and China.
For Ugoji; “With government economic reforms running at full throttle, prospects are high for the sustained development of the Nigerian Capital Market as a viable tool for driving Nigeria’s economic growth.
“Countries that have successfully leveraged the capital market for economic growth have a number of similar characteristics, some of which include: large domestic institutional investor base, developed infrastructure, macroeconomic stability, etc.
“Nigeria must therefore implement some of these initiatives in order to further deepen its capital markets for economic growth”, she insisted.
