Showing Resilience amidst COVID-19

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The technological transformation by the Nigerian Stock Exchange has made the stock market to operate remotely and recover over N552 billion despite the lockdown caused by COVID-19, writes Goddy Egene

The coronavirus pandemic, known as COVID-19, is blowing an ill wind that is doing nobody any good. The global economic is in trouble following lockdown to curtail further spread of the virus.

Nigeria is not an exception as the federal government had since the beginning April locked down Lagos, Federal Capital Territory (FCT), Abuja and Ogun State. Some other states have equally joined to lockdown thereby putting a hold on economic activities.

Like other sectors of the economy, the capital market is witnessing the negative impact of the COVID-19. Trading is being done remotely since the lockdown began. Many companies have rescheduled their activities, which is having serious financial implications.
Despite the lockdown, the stock market has shown some resilience going by the performance of the market so far. The market had dipped by20.6 per cent in the first quarter of the year. However, the market has witnessed some recovery amidst the challenges of the COVID-19. Specifically, the market capitalisation of the Nigerian Stock Exchange (NSE) has appreciated by N553 billion since the beginning of the lockdown. Similarly, the NSE All-Share Index rose from 21,861.78 to 22,920.41.

However, market analysts said the resilience that the Nigerian bourse has shown in these challenging times resulted from two major factors, which are the activation of the company’s business continuity plan(BCP) and consistent capacity building in technology, automation and digitalisation of its operations over the years.
Before the federal government announced the lockdown of Lagos, Ogun State and Abuja, leading to the shutting down of all businesses in the affected states, the NSE had activated had its BCP.

The Chief Executive Officer of NSE, Mr. Oscar Onyema said from March 25, the exchange would close all its trading floors temporarily for 30 days as part of measures to curtail the spread of the Coronavirus. According to him, remote trading would then be adopted while its staff would be available through all its digital platforms to provide support.

“Over three weeks ago, we activated precautionary health measures across our offices where we screened visitors with thermometers, provided sanitisers and minimised access into our premises. We have activated a 30-day remote working plan for our employees excluding essential staff. All our trading floors will be temporarily closed, although remote trading will continue and NSE staff will be available through all our digital platforms to provide support. We regret any inconvenience this may cause in the discharge of your business activities, but we must act in the best interest of all stakeholders at this time,” Onyema said.

According to him, in line with their robust business continuity management framework, they would like to reassure stakeholders that they have put in place measures to ensure their operations and trading activities continue seamlessly throughout this period.

He said: “As an exchange, we will ensure that all relevant information continues to flow into the market to ensure the pricing of risk assets remains transparent and reliable across asset classes to allow investors to value their portfolios and make informed investment decisions under these volatile conditions. Dealing members are, therefore, encouraged to continue to trade remotely via our electronic platforms such as FIX protocol and XNET, and reach out to their Compliance Officer if any support is required. Please note that we will provide manual support to members without remote access during this period. Issuers who have any business to conduct with The Exchange can reach out to their Relationship Manager for guidance. You should continue to submit all regulatory filings via Issuers’ Portal (X-Issuer).”

Since the activation of its BCP on 23 March 2020, the employees of the NSE have engaged in remote working while dealing member firms have been trading remotely and seamlessly. The NSE has also continued to actively pursue avenues to deepen the capital market and widen the pool of investment instruments for investors with new listings and capacity building exercises. However, all of these would not have been possible without technology that has been systematically put in place since 2011.

Enabling seamless trading activities and business Operations
The journey to the present technological state of the NSE began in 2013 through its transformation agenda with the launch of the historic and robust technology platform, X-GEN in 2013. X-GEN has demonstrated its innovative trading capabilities, delivering benefits including: improved market order flow, increase in the number of trades, direct market access, remote trading and income diversification for the exchange and its stakeholders. X-Gen has also brought about the advent of mobile trading technologies to the retail and institutional segments of the Nigerian capital market.

NSE continued the deployment of cutting edge technology with the launch of an Issuers’ Portal, called X-Issuer. X-Issuer is a secure web based portal designed to enable issuers file information in an electronic format to the NSE, thereby improving the compliance and regulation experience of issuers. Some of the unique benefits of the application include data capture, form submission validation and other ancillary services such as submission notification mechanisms and tracking of submitted information.

The Exchange had explained that with this, issuers were no longer required to submit hard copies of information to the exchange by post, hand delivery or courier, which we will agree is more relevant than ever under today’s circumstances.

Equally, in 2014 the NSE launch of the X-Whistle – a programme that empowers a whistleblower (an employee, an investor, a compliance officer, an issuer, a stockbroker or any member of the public) to report possible violations of the rules and regulations of the exchange, the securities law, and fraud related to activity within the capital market.

This platform promotes the exchange’s zero-tolerance policy for misconduct and has played a significant role in minimising market infractions. NSE was reported to have assisted the federal government in building a whistle blowing portal that has seen the country receive several billions of naira in stolen loot.

In 2015, the NSE launched the Broker Oversight & Supervision System (X-BOSS), a first of its kind in the West African capital market.
Describing the platform as a marriage between cutting edge, twenty-first century technology and robust, comprehensive regulation, Executive Director, Regulation, NSE, Ms. Tinuade Awe, had said: “The system is designed to promote compliance as well as reduce the financial and operational burden of complying with regulatory requirements. At the time of the launch, she asserted that the system would provide a secure central repository for information about dealing members of the exchange, which is critical from a regulatory perspective.”

The system also ensures that dealing members are abreast of their regulatory obligations at all times, a function that is heavily leveraged today.
To strengthen the integrity of the market and create a safe and secure trading experience, the NSE deployed X-Smart. This market surveillance tool leverages artificial intelligence and allows the exchange to proactively monitor market manipulation (including spoofing and layering), detect and deter manipulative tendencies, gather intelligence, carry out traders’ monitoring and analysis, conduct multi-asset and cross-market surveillance, and execute risk-based supervision of flagged participants.

The NSE’s customer-centric approach has given rise to several other solutions including X-Bot and X-Mobile. X-Bot, the artificial intelligence (AI) powered Chatbot that allows investors make enquiries through Facebook Messenger. It was designed to provide market participants, especially retail investors with fast, convenient and real-time access to data that can influence investment decisions. “An additional benefit of the X-Bot is its capability to learn through customers’ interactions and become better at providing our customers with more relevant and timely solutions progressively,” the exchange said.

On the other hand, X-Mobile is a mobile app designed to enhance investors’ participation in the Nigerian capital market. It features market snapshots, stock prices, market analytics, financial news, dealing members directory and trade simulation.