BY PETER EGWUATU

An analyst has suggested some policies and measures that will act as checks and balance  and help protect investors and further sanitise the Nigerian capital market.

Mr. Jude Fejokwu, Principal Analyst, Thaddeus Investment Advisors & Research Ltd, said that payment days for dividends must be within seven calendar days of the stocks’ ex-dividend date.

This, according to him, will prevent the scenario of interest being generated on approved dividend payments during the time lag between approval and payment.

He further stated that the regulators should not allow owner and/or chief executive of a listed company to be on the the Council of the Nigerian Stock Exchange, NSE.

Continuing, he said “No brokerage company should be allowed to control more than 15 percent  of the annual value of trades on the Nigerian Stock Exchange on an annual basis.

No shareholder (in excess of five percent) of any investment bank or brokerage firm should be allowed to be on the board of any listed company.”

Other policies that are needed in the market, according to him include that “All mutual fund companies and brokerage firms must state how many shares they hold in proprietary form and for discretionary accounts (accounts in which they decide the portfolio composition) of the top 50 most capitalised companies in Nigeria on a monthly basis.”

Fejokwu, further advocated that the NSE needs to allow the ‘shorting’ of stocks.  This, he stated, will lead to a more balanced market as can then begin to profit from negative news and performances of companies.

According to him “This is largely why in Nigeria of today, market participants are highly sensitive to the release of negative news on companies and/or their management, because they cannot make money from it and thereof deem the information unnecessary and not useful.

People will be more interested in the truth (when negative) when they realise they can profit from it by taking position instead of just avoiding potential losses as is the case today.  Money can and should be allowed to be made from the good and bad fortunes of companies.”