The Nigerian capital market has been in the news for the wrong reasons arising from a share scam and bear run with no end in sight. The Chairman of the Association of Stockbroking Houses, Chief O.P Ezeagu, spoke to journalists in Lagos on these developments and how the market can be revived, among other issues. Goddy Egene presents the excerpts:
What led to the formation of the Association of Owners of Stockbroking Houses of Nigeria (ASHON) ?
The Association of Stockbroking Houses of Nigeria (ASHON) was formed as the umbrella body of all Dealing Member firms of the Nigerian Stock Exchange (NSE) and a trade group recognised by the Securities and Exchange Commission (SEC) to promote and protect the interest of its members. The main objective of the association is to advance the transparent practice of stockbroking business in Nigeria, and to protect the integrity of our segment of the capital market, which is an important sub-sector of the Nigerian economy. Part of the objective is to serve as an advocacy body to promote, advance and protect the interest of its members within the Nigerian economy, working in collaboration and co-operation with other similar bodies and or agencies.
To what extent can you say that ASHON is living up to the objectives of its founding fathers?
ASHON has lived up to the objectives of the founding fathers in the area of market development, investor education and making financial commitment to the structures such as Investor Protection Fund (IPF) and Trade Guaranteed Fund (TGF). Without being immodest, I can say that our members have always collaborated with the capital market regulators by making inputs into policy issues that enhance market growth and development. For instance, the recently introduced Complaint Management Framework, Direct Cash Settlement, etc to protect the investors and other stakeholders in the Capital Market.
What would you consider as the major challenges affecting your Association and what is the way forward?
One of the major challenges is on how to restore investors’ confidence in the market since the market meltdown of the last 10 years. Also, the government in its monetary and fiscal policies have tended to completely neglect or ignored the capital market as the wheel of economic development. The way forward is for government to use the capital market to source long term funds necessary to finance infrastructures in the economy. Government’s monetary and fiscal policies should also be geared towards encouraging savings and investments.
As a trade group, what are the contributions of ASHON towards the growth and development of the Nigeria’s capital market since its inception?
Some of the major contributions of ASHON towards the growth and development of the capital market include encouraging the introduction of new products that excites investors, engendering investors’ confidence as well as making the market the first destination of choice to both local and international investors, ensuring that there is transparency and integrity in the market and engaging various stakeholders in the capital market, notably our members, other trade groups, regulators, relevant Government agencies including members of the National Assembly to promote capital market development structures like Complaints Management Framework to resolve issues between Stakeholders in the Capital Market
What are the roles of ASHON towards investor education in Nigeria?
ASHON and the regulators have jointly organized road shows locally and internationally to boost investor education severally. ASHON always enlightened its clients on the various measures that have been embarked upon to assure the safety of their investments in the capital market. New products are well advertised before they are bought into the market to ensure investors’ participation.
Some stockbrokers have been involved in unethical practices in recent time, prompting some people to label all stockbrokers as fraudulent. What is your take on this?
In any Association, there are bound to be few bad eggs and the actions or activities of these few do not criminalise the entire members. As earlier stated, we have, in conjunction with the regulators, put in place, a robust compliant management framework to ensure the quick resolution of complaints in the market.
What policy measures are put in place to ensure investor protection in the capital market?
Some of the policy measures to protect investors are zero tolerance to infractions, direct cash settlement, investor protection fund and robust complaints management framework
What factors would you consider in encouraging indigenous and foreign investors to patronise the Nigeria’s capital market and how would you advise your members in this era of investor apathy?
Zero tolerance to market infractions and the use of technology to drive the revolution taking place in the market is the key. Again, investor education and the policy consistency of the government will help to ensure that investors patronise the market. My advice to members is to avoid sharp practices and operate with the highest level of professionalism, accountability, transparency and integrity. This would engender greater confidence and attract more investors to patronise the market.
And what about investors ?
I strongly advise investors to embrace the direct cash settlement which will enable sales proceed to settle into their bank accounts directly. They should not patronise quacks and always follow up on their mandates to their brokers to ensure quick and timely delivery on transactions.
If you are to advise the federal government to support the development of the Nigeria’s capital market at a period like this, identity three key issues that can accelerate market growth.?
Downward review of the Monetary Policy Rate (MPR) to stimulate investment, policy stability, clear and stable foreign exchange policy and implementation of appropriate legislation that will compel the federal government to fund its infrastructural development through the capital market. Others are strengthening of the SEC with a view to positioning it to perform its market surveillance, market development and other regulatory functions more effectively, compelling the Bureau of Public Enterprises (BPE) to sell at least 40 per cent of privatised national assets through the instrumentality of the capital market to engender fair valuation, transparency, accountability, integrity and greater participation of the average Nigerian investor, utilising the capital market to raise funds for infrastructural development projects, ensuring security of lives and property as a panacea for peace and development and pursuing diversification of the economy away from oil as a major foreign exchange earner
What are your general comments ?
The Nigerian capital market is a safe haven for both local and foreign investors. Its potential are largely untapped and the Nigerian economy may ignore these potentials to its own peril. ASHON is in the process of bringing on board a new Commodities Exchange which, when finally birthed, shall encourage the electronic trading of various commodities, for example, solid minerals, agricultural products, as well as oil and gas products. This in effect will give vent to the agricultural revolution which the federal and state governments are currently pursuing and give our members new window of income generation and investors another option for investments.