…calls for more collaboration, awareness
In a bid to boost investor participation and securities lending transactions in the Nigerian capital market, the Securities and Exchange Commission (SEC), National Pension Commission (PENCOM) and Nigerian Exchange Limited (NGX) have reiterated their commitment towards deepening the securities lending landscape.
This was stated at the virtual workshop held in collaboration with Central Securities Clearing System Plc (CSCS), Cardinalstone Partners, Stanbic IBTC Nominees, and the Pension Fund Operators Association of Nigeria (PenOps) on Wednesday, 9 August 2023. The virtual workshop with the theme “Business Facilitation Act 2023 as a catalyst for deepening Securities lending in Nigeria,” brought together various stakeholders, including but not limited to retail and institutional investors, Pension Funds Administrators, Fund Managers, ETF Issuers, regulators and policymakers.
The Divisional Head, Capital Markets, NGX, Jude Chiemeka, in his opening remarks, said that one of the hallmarks of the immediate past administration of President Muhammadu Buhari was the assent to the Business Facilitation (Miscellaneous Provisions) Act, 2022 on 14 February 2023, which saw the ratification of significant amendments to the Pension Reform Act, Section 89 (2). This, he said, allows pension assets to be eligible for securities lending subject to guidelines issued by PENCOM.
He added that the amendment presents opportunities in the securities landscape in Nigeria for institutional investors such as PFAs. “In light of this, NGX and PENCOM will closely collaborate to deepen this space for the benefit of Retirement Savings Account (RSA) holders and the pension industry at large. NGX will continue to partner with all market stakeholders to enhance securities lending, ultimately towards the growth and development of the capital market in Nigeria and Africa at large.”
Delivering his goodwill remarks, the Director of Registration, Exchanges, Market Infrastructure, and Innovation, SEC, Abdulkadri Abass, represented by Senior Manager, Franca Ebube, said SEC remains committed to maintaining a fair, orderly and efficient market and protect the interest of investors. She added that the new provision of the Business Facilitation Act enabling PFAs to participate in securities lending will without doubt deepen the market and increase liquidity.
Corroborating her, the Head of Investment Supervision, PENCOM, Ibrahim Kangiwa, said that the passage of the Business Facilitation Act 2023, has enabled PENCOM to proceed developing guidelines towards enabling securities lending via its engagement with NGX and other stakeholders. Kangiwa revealed that once the commission is done working on the processes and regulations, it will release guidelines for PFAs before the end of the year.
Shedding light on CSCS’s initiatives on securities lending, its Divisional Head of Business Services and Client Experience, Onome Komolafe, explained the pre-settlement and pre-trade activities, adding that there is a detachment process for securities lending which CSCS is is also responsible for.
In their remarks, Chief Executive Officer, Pension Fund Operators Association of Nigeria (PenOps), Oguche Agudah; Chief Executive Officer, Stanbic Nominees, Babatunde Majiyagbe; Chief Executive Officer, CardinalStone Securities, Peter Omoregie; and the President of the Fund Managers Association of Nigeria, Aigbovbioise Aig-Imoukhuede, all noted that the lack of awareness, inadequate of supply of securities are responsible for the dearth of activities in securities lending and urged for more collaboration among stakeholders to spur significant growth and activity in the space.