For the Nigerian stock market to be taken serious as a global player, it must work by the rules and ensure strict adherence as obtained in other jurisdictions. The various confidence building measures instituted so far by the Nigerian Stock Exchange (NSE) and its regulator have not yielded the much needed fruit? to stabilise the market and build investors confidence.
?One of the major challenges that had engulfed the exchange was the lapses in the enforcement of post listing rules on quoted companies, particularly as they relate to corporate reporting of interim and final financial accounts.
However, the NSE recently reported that it has recorded 77 per cent compliance in the rendition of quarterly returns by stockbroking firms as at June 1, 2012.
According to NSE, 195 broking firms have December 31 as their year end, disclosing that out of that number, 150 complied by submitting their accounts while 45 were yet to submit.
Stockbroking firms are required to render returns to the exchange as part of the new policies introduced to sanitise the market and make it more attractive to investors.
The returns, which are made quarterly and yearly, are in form of accounts, stating the financial position of the broking house, including its income, expenditure among others.
The NSE had last March handed down a two-week ultimatum to the operators, stressing that it would no longer compromise in the enforcement of market rules going forward.
The Chief Executive Officer of NSE, Mr. Oscar Onyema, had said: “The exchange is determined to enforce its rules and we are giving the stockbroking community two weeks to submit their returns or risk suspension.”
However, the exchange gave additional grace period to enable the stockbroking firms comply.
The grace period, it was gathered, stemmed from appeals made by the stockbroking community to the exchange for more time.
In appealing to the exchange, one of the Managing Director who spoke on the condition of anonymity said: “While we understand the renewed zeal of the management of the NSE to enforce rules, it would be more trouble for operators if any of them was suspended from trading at this moment. We are therefore considering the option of approaching the Exchange for more time.”
The renewed enforcement stance of the exchange came from the realisation that one of the reasons the market collapsed in 2008 was weak enforcement.
Onyema had noted that the exchange had a known practice of not enforcing the rules, in terms of the quality and timeliness of reporting, making it difficult to perform its role as a self-regulating organisation (SRO).
Oscar had said paper-driven process slowed down the regulatory capacity of the Exchange and contributed to the lax attitude surrounding enforcement.
“While important information was sometimes released on a selective basis, some listed companies and broker/dealer firms engaged in the act of “cooking their books,” Onyema said.
He added that inadequate disclosure by listed companies and broker/dealer firms was another key contributor to the crisis.
Meanwhile operators believed that a major expectation from the Acting Director General of the Securities and Exchange Commission, Mr. Ibrahim Bolaji Bello was to be resolute in the enforcement of compliance with all rules and regulations of the Capital Market.
The Managing Director, Lamberth Securities Limited, Mr. David Adonri in a chat with LEADERSHIP said this became necessary to help lift the market out of despondency and make it attractive for institutional investors.
He also stressed the need for the acting DG to carry operators and other stakeholders along in policy formulation that will move the market forward.
?“The Acting SEC DG is an experienced Stockbroker. He has a wealth of experience as a regulator for over a decade in SEC. Consequently, he is well prepared for this assignment. I expect him to be resolute in the enforcement of compliance with all rules and regulations of the Capital Market. He should also endeavour to carry the Operators along whenever new policies are to be enunciated,” Adonri said.
Speaking on the state of the market Adonri noted that the equities market is in dynamic equilibrium and prices are reflective of fundamentals and macroeconomic variables.
He added that aggregate demand is not likely to increase during this period due to migration of financial assets to fixed income and absence of material price sensitive information.