By Michael Eboh

The Nigerian Stock Exchange, NSE, has announced plans to commence securities lending and short selling.

Short selling is the selling of a security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller. In short selling, sellers assume that they will be able to buy the stock at a lower amount than the price at which they sold short.

Security lending, on the other hand, is a loan of a security from one broker/dealer to another, who must eventually return the same security as repayment. The loan is often collateralized.

Securities lending allows a broker-dealer in possession of a particular security to earn enhanced returns on the security through finance charges.

Mr. Oscar Onyema, Chief Executive Officer, NSE, said the Exchange is collaborating with industry participants to ensure a smooth take off of the proposed initiatives.

He lamented the fact that traders only make money in Nigerian market today when the market goes up, saying that participants should be able to make money whether the market is up or down if they can short securities.

He also promised that his management would encourage and support the introduction of Hedge funds into Nigerian capital market and he highlighted trading of bonds in the secondary market, among others as priority areas.

meanwhile, a group of foreign institutional investors from UBS Wealth Management have indicated interest in investing in the Nigerian capital market.

The investors, accompanied by Dr. Kalu Idika Kalu, Chairman, BGL Plc, on a fact-finding mission to the Nigerian Stock Exchange, NSE, Wednesday, noted that their interest was as a result of the opportunities inherent in the market and the country in general.

Kalu explained that the Nigerian capital market has remained attractive to discerning investors and that the visitors were in the market because they saw value in the market. He said that BGL is on a quest to encourage international investors to participate in Nigerian markets and that once they come, it would encourage local investors to do same.

According to a statement, signed by Mr. Wole Tokede, Senior Manager, Corporate Communication, NSE, UBS Wealth Management, which led a group of global institutional investors into the country through BGL, is one of the largest financial institutions with over $1 trillion under management and an overall market capitalization of $66 billion.

He noted that UBS is also the largest private bank in the world, with $450 billion in client assets and has 135 years of experience, with an unmatched heritage of success in serving substantial investors globally.

He added that the seven-man delegation was given the unique privilege of ringing the opening bell for the trading day.

Addressing the delegates, Onyema assured stakeholders in the market that the NSE would soon become a preferred investment destination for both local and international investors.

Onyema explained that the present management of the NSE has already taken some steps that would encourage rapid growth and development of the market.

He identified zero tolerance to violation of post-listing requirements; ongoing trading platform upgrades; strengthening the NSE workforce; broadening of investment options; transparent and focused leadership; as well as working together with relevant government agencies to ensure that critical sectors of the economy like power, telecom, upstream oil and gas, and agriculture are listed and traded on The Exchange.