Nigeria’s SEC pushes for privatization listings, stockbroker consolidation and NSE demutualization

Nigeria’s Securities and Exchange Commission (www.sec.gov.ng) hopes to boost liquidity on the Nigerian Stock Exchange (www.nse.com.ng) by getting previously privatized enterprises to list their shares. Arunma Oteh, Director General of the SEC, also said that demutualization of the NSE is on track, according to a report in the local Vanguard newspaper, and the commission is still working on the framework and guideline to before the exercise starts.
Oteh said the SEC is to meet the Bureau of Public Enterprises (BPE): “The Commission will be working with the BPE to ensure that already privatized entities before now are listed on the NSE based on the agreement they had with the Bureau. For instance Eleme Petrochemical, one of the companies previously privatized, is doing well and the portion of government shares could be listed on the exchange to allow the indigenes own stake and participate in the fortune of the entity.” She said recently privatized power sector companies could boost the volume and value of transactions by listing on the NSE.
She also praised efforts by the NSE to attract more companies to list: “This is the reason why the Commission approved the multiple listing requirements recommended by the NSE. This has not been in existence before now.”

Demutualization
Demutualization is a process for turning an exchange from a mutual association, usually owned by stockbrokers and other stakeholders, into a for-profit company. It can split ownership from licences to trade and in some cases, such as London and Johannesburg, the stock exchange itself becomes a listed entity. Ms Oteh said: “The committee on demutualization has finished its work and we are currently working on the frame work and guideline that will be put in place. Once we are through, the Commission will announce it. Demutualization will ensure owners of the Exchange get real value of their entity.”
She also said the SEC is working with the Association of Stock-broking Houses of Nigeria (ASHON) to consolidate stockbrokers and a committee on market development is still working to find ways to address minimum capital requirements, upgrading technology, and capacity-building, among others. She said a new guideline is expected from the National Pension Commission (www.pencom.gov.ng) which will further boost activities in the market.

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