Stockbrokers’ Institute Seeks CBN Support For Market Growth

The Chartered Institute of Stockbrokers (CIS) has requested some strategic support from the Central Bank of Nigeria (CBN) to enhance financial intermediation roles of its members and boost transactions in the Nigerian securities market.

During a recent courtesy visit to by the leadership of the Institute to the apex bank’s Governor, Mr. Olayemi Cardoso, who is also a stockbroker, in his Lagos Office, the senior stockbrokers, led by the president and chairman of Council, Mr. Oluwole Adeosun, applauded the appointment of senior stockbrokers in some key positions in the economy by the federal government.

Adeosun, who noted that Cardoso had been a long-standing member of the Institute explained that stockbroking firms required some supports from CBN to enable them to operate optimally and attract more participants into the market.

Besides, Adeosun affirmed the capacity and willingness of stockbrokers to support the proposed recapitalization of banks in the next 24 months, saying this has been demonstrated during the previous recapitalization programmes in Nigeria.

He added that “the Nigerian capital market has the capacity to support the recapitalization exercise. It was amply demonstrated during the indigenization exercise a far back as 1972 and successive banking sector recapitalization programmes over the years up till the last major banking recapitalization exercise between 2004 to 2006.

“With technology and new subscription channels like mobile apps, the current exercise should record even greater success and bring in more and younger Nigerians into the investment community.
“We request that securities of publicly listed banks should be allowed as marginable securities as long as these securities pass the ‘Criteria for Determining Marginable Securities’ test. Margin lending drives the growth of capital markets in the advanced countries by enabling investors to acquire securities in excess of their direct savings within a regulated market framework.”

“Pension funds are globally the foundational base that drive sustainable liquidity for the local equity market. While the Pension Act permits the Pension Fund Administrators to invest up to 25 per cent of their pension assets in the equity arm of the capital market, we have noticed that about 10 per cent of the funds are invested in the equity market, despite the enhanced regulation, investor protection, and high return in the market.

“Given the critical role of pension fund investment in galvanizing liquidity in the domestic equity market, Pension Fund Administrators (PFAs) should be investing a substantially higher proportion of their funds on equities. We therefore seek the support of the CBN to engage with PENCOM in this regard,” said Adeosun.

Responding, Cardoso appreciated the visit and assured the Institute that all the issues raised would be looked at dispassionately. The Governor promised to establish an enduring institutionalized structure.