National Assembly Complex
By Goddy Egene
Strong indications emerged last Monday that the House of Representatives Ad hoc Committee probing the near collapse of Nigerian capital market would look at the recommendations of a 15-man National Committee (NC) set up to review the market structure and processes in 2009 as a further guide in its national assignment.
That NC, headed by Mr. Adedotun Sulaiman, who was former Country Director of Accenture, was set up by the Securities and Exchange Commission (SEC) under the leadership of Mr. Musa Al-Faki in the wake of the market crisis.
The NC had the mandate to review the structure of the capital market and processes as well as the regulatory institutional framework and make recommendations for ways to improve the operational efficiency and transparency of the market.
In carrying out its mandate, the NC got contributions from many stakeholders including seven corporate bodies and 43 individuals and made 32 recommendations aimed at transforming the Nigerian capital market to a world class status.
Some of the recommendations are already being implemented by the current management of SEC.
However, sources close to the House Committee told THISDAY last Monday that given the references made by some stakeholders to the NC report and the recommendations, the committee would likely look at the report before concluding the assignment.
“It is understandable that the report prepared in 2009 has some far-reaching recommendations that would be of importance and assistance to the House Committee in successfully concluding its assignment. Considering the fact the aim of setting up the committee is to find a way of reviving the market and make it more attractive, those recommendations are likely to be looked at. This will, in fact, assist them in making their own recommendations,” the source said.
The recommendations cover: market expansion, liquidity enhancement, collective investment schemes, structure for market making, length of trading house, offer process, transactions cost, SEC’s reorganisation, improving market efficiency and regulation, capacity building, Nigerian Stock Exchange (NSE) demutualisation and prevention of manipulation.
Regarding prevention of manipulation, NC recommended that there should be vigorous policing and enforcement of punitive actions against insider abuse and other forms of market manipulation.
“To do that, there is a need for clearly defined, enforceable standards as well as an effective enforcement framework. Fines and disciplinary records should be announced and made publicly available to serve as a deterrent to operators,” the committee said.
On the area of capacity building for SEC, the Committee recommended that the commission should have a clear programme for role-based skills and capacity building to improve the mandate-critical roles of the regulator.
“In terms of organisation and skills, this is a multi-stepped process that should involve: Conducting a staff audit to ascertain current skill sets and define future requirements. Establishing a transparent, merit-driven recruitment and human resource management processes and practices to guarantee attraction and retention of skilled staff.
“The board of SEC exercising its powers already vested by the ISA, to set a competitive compensation structure benchmarked to capital market operators, that is appropriate to attract and retain the calibre of personnel required for effective and efficient operation,” the committee said.