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SEC pursues listing, plans further stratification of stock market

By Nkiruka Nnorom

The Securities and Exchange Commission, SEC, has said that plans are under-way to further stratify the stock market to allow more Small and Medium scale Enterprises, SMEs, that were hitherto not listed on the Nigerian Stock Exchange, NSE, to access the market.

Speaking in an interactive session with capital market correspondents in Lagos, the Director General, SEC, Mr. Mounir Gwarzo, said that the process when completed would lessen the strident listing rules that have been hindering such companies from listing in the stock market.

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He explained that under the new arrangement, the stock market would be classified under tier one, tier two and tier three markets, thereby allowing companies that want to set up small exchanges do so. He stated that the move would allow more SMEs to list in any of the exchanges that would be set up other the Nigerian Stock Exchange.

He said: “As at today, our law provides the registration of Exchange’s trading platform, cashless trade points  and what we have at the Nigeria Stock Exchange are three boards. We have the Premium Board, we have the Main Board and we have the Alternative Securities Market, AseM, Board and it has been hard for companies to list under the existing Boards.

What we are doing is to also stratify licence for an Exchange; what we have today is a unified requirement for companies to set up an exchange. So, the stratification will lessen the requirement. “If you want to have set up  an exchange and you want to be on tier 2, the requirement will be lesser than that on tier one.

If you are also going to set up an exchange under tier three, the requirement will be lesser than tier two and the kind of company that will also be listed will be lesser than the other one.  We think it will probably drive some of these SMEs to be listed because over the last 20 -25 years, we have not seen much progress with the existing status.

There are few companies that want to come in and set up small trading platforms and we think we have to give the necessary backing to do that”.

On delay in take-off of crowd funding, he said that there are some restrictions in the Companies and Allied Matters Act, CAMA, and the Investment and Securities Act, ISA, that have been impediment for the Commission to drive crowd funding.

He, however, said that with the review of CAMA and ISA, which is on-gong, those limitations are addressed. “Hopefully by the time the law is out, it will be much easier for SEC to come out with rules on crowd funding,” he said.

Fielding questions on the cause of delay in demutualisation of the Exchange, saying that its  role as the apex regulator of the Nigerian capital market to come up with guidelines, rules and regulations to drive the process. He explained that the Commission has come up with rules and regulations and is committed to ensuring that any institution that intends to demutualise does that successfully.

He further stated that the on-going review of CAMA and ISA would also provide an easy route for any company that wants to demutualize to do so.

His words: “We have engagement with the NSE in terms of briefing us on how far they have gone; they appointed  some consultants to drive the process. Again that is the review we are having in CAMA, for any company that is mutualised and wants to demutualise to have an easy route to do so.”


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