The Chairman, Association of Stockbroking Houses of Nigeria, ASHON, Chief Patrick Ezeagu in this interview explained the significance of the Approval- in- Principle recently granted for the commencement of Lagos Commodities and Futures Exchange, LCFE, by the Securities and Exchange Commission, SEC. He also spoke on privatisation of public entities, mutual fund trading platform among others.
By Peter Egwuatu
NOW that Association of Stock broking Houses of Nigeria, ASHON has been granted the Approval-In Principle for Lagos Commodities and Futures Exchange, LCFE, by the Securities and Exchange Commission, SEC. What is the significance of this approval and what is the next line of action?
The Approval-In-Principle means SEC believes that we are on course and we can start to set up for operations, that is, do those things that erstwhile regulatory requirements hindered us from doing. We were given the window to prepare for final approval. This endorsement by SEC signifies that we are very close to the commencement of full operations.
Is ASHON the soul promoter of LCFE? How prepared are stockbrokers to fully trade in commodities and derivatives?
Yes. At the inception, ASHON as the promoter of the commodity exchange did a feasibility study which has now become the roadmap for the project. In it, we have made provision in conjunction with the Chartered Institute of Stockbrokers, CIS, to train all our members on the workings of the new commodity exchange.
Indeed, we had done some initial training and others will follow soon before we fully roll out.
Is ASHON considering holistic training for its members to help them build capacity for the take-off of the commodity exchange? What about the financial press?
The training of our members is to be handled by our institute, CIS, which is empowered by law to train professionals in the capital market in Nigeria. The financial press is also a member of the capital market community and as partners we shall look into a collaborative effort to ensure that they are trained with support coming from some of our other partners.
Stockbrokers are calling for the privatisation of all moribund government enterprises through the capital market, against the background of the future privatization programme. What is your advice to the government?
The government should always patronize the capital market to make it more viable. The professionals in the sector should be involved in policy making to make this privatization initiative a success. Consequently, and to ensure transparency, all future privatization processes should be done through the capital market.
ASHON is believed to have restructured its Governing Council. What informed this development and does it have to do with the birth of LCFE?
The restructuring of the Governing Council of ASHON is in keeping with provisions of the constitution of the association. What happened was that we wanted to ensure that our secretariat is empowered to become more visible in the scheme of things. We changed the nomenclature of our principal officers to reflect global best practices
Can you avail the investing public of the benefits of the Mutual Funds Trading Platform recently launched by the Nigerian Stock Exchange of which ASHON was involved?
There are so many advantages of trading in mutual funds to which the recently launched trading platform will bring to the fore. It is the simplest way to achieve a reduction in risk by way of diversification of one’s portfolio. Investors will enjoy the expertise of a professional fund manager without paying extra for the service. It affords them the opportunity to enjoy economies of scale which is achieved through the pooling of other peoples funds to increase bargaining power. They have the opportunity of easy entry and exit which this platform further provides. It also encourages the financial inclusion of the retail investors.
ASHON is preparing for its national capital market summit and awards ceremony. What is the significance of this year’s event?
The uniqueness of this year’s Capital Market Summit and Awards ceremony stems from the fact that ASHON has undergone a lot of realignment of values. The association has been registered with SEC and we are making various efforts in diversifying the income streams of our members through the creation of other trading areas like commodities with the birth of the LCFE and the recently launched Mutual Funds Trading Platform of NSE.
The Nigerian stock market has been wobbling in recent months as it took a beating from uncertainty prior to the general election. What is your advice to potential and existing investors in this respect?
The advice to potential and existing investors is to continue to have hope in the market. What the elections had done to the market, it did to all other sectors of the economy. The elections will come and go, they should not take panicky decisions. They should also always use the services of stockbrokers who are professionals in accessing the market.
What is your advice to the government in terms of protecting the stock market and the economy, knowing fully well that the market is very sensitive to uncertainties?
There are a lot that the government should do but basic of which is to provide the enabling environment, ensure economic stability of the economy and intervene where necessary e.g. the case of Contract Stamp contentions between NIPOST and FIRS, waiver of VAT for capital market transactions and granting incentives for companies quoted on the stock exchange, provide basic infrastructures like power to boost the economy, reintroduce margin trading, constitute the board of SEC, provide direct incentives to capital market, and review the effects of minimum tax on our members, etc.
What can you say about trade groups or associations in the Nigerian capital market; do you support the call for regulatory authorities to fund them?
Yes, I am in support of this demand. We need to discuss with the regulatory authorities the issue of funding of trade groups/associations/institutes like ASHON and CIS to include a percentage of transaction charges as is the case with other associations in Nigeria outside the capital market. We are proposing a 0.1 percent of transaction cost shared between ASHON and CIS.