Mr Oscar Onyema, the Director-General of the Nigerian Stock Exchange (NSE), on Wednesday blamed the crisis in the capital market on the lack of enforcement of the rules of the market. ?
Onyema made the remark at the public hearing on the operations of the capital market, organised by the House of Representatives Committee on Capital Market and Other Institutions.?
He said that inadequate regulatory disclosure by listed companies, broker and dealer firms were key contributors to the capital market crisis.
“Reports to NSE and investing public were often inaccurate, late or simply not submitted.
“This prevented market access to critical information that is required in making informed investment decisions.’’??
Onyema said that while some listed companies did not comply with the reporting rules of the exchange, some broker and dealer firms engaged in insider trading with their fiduciary clients.
He also attributed low literacy, market indiscipline and lack of investor and consumer sophistication to the fall of the market.
“The capital market boom of 2004 to 2008 triggered an increase in retail participation of first time investors who poured into the market, unaware of the innate risks of investing in the capital market.’’
According to the NSE boss, poor governance also facilitated the lapses in the market integrity and loss of investor confidence.?
Onyema told the committee that the management of the exchange would enforce the minimum capital requirement for brokers and dealers in order to enhance the operations of the market.
He said that more than 30 firms met the N70 million minimum capital requirement as at the end of 2011.
“An in-house investigation panel has been reconstituted, with the introduction of penalties for seven violations previously lacking in the exchange rules.’’?
Dr Bernard Verr, a Director at the Infrastructure Concession and Regulatory Commission (ICRC), said the interests of investors were not considered during the capitalisation of banks.
He said that SEC misled investors to keep investing in the market even when it had confirmed the take-over of the moribund banks.
Verr urged the committee to scrutinise the operations of SEC and determine if it lived to expectations of investors.
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