SEC, PENCOM, And NGX Renew Their Pledge To Boost Securities Lending In Nigerian Capital Market

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In an effort to enhance investor engagement and promote securities lending transactions within Nigeria’s capital market, the Securities and Exchange Commission (SEC), the National Pension Commission (PENCOM), and the Nigerian Exchange Limited (NGX) have once again affirmed their commitment.

This reiteration took place during a recent webinar organized by NGX focusing on securities lending. The event was a collaboration with the Central Securities Clearing System Plc (CSCS), Cardinalstone Partners, Stanbic IBTC Nominees, and the Pension Fund Operators Association of Nigeria (PenOp).

The virtual gathering brought together a diverse range of participants, including retail and institutional investors, Pension Funds Administrators, Fund Managers, ETF Issuers, regulators, and policymakers. The central theme of the event was “Harnessing the Potential of the Business Facilitation Act 2023 to Drive Securities Lending in Nigeria.”

Jude Chiemeka, Divisional Head of Capital Markets at NGX, highlighted in his introductory speech the noteworthy achievement of the Business Facilitation (Miscellaneous Provisions) Act, 2022, signed during the previous administration. This legislative move led to vital amendments in Section 89 (2) of the Pension Reform Act, enabling pension assets to be considered for securities lending, subject to guidelines issued by PENCOM.

Chiemeka emphasized the transformative possibilities that arise from these changes, particularly for institutional investors like Pension Fund Administrators (PFAs). He stressed the intention of NGX and PENCOM to establish a close partnership to expand this domain, bringing benefits to Retirement Savings Account (RSA) holders and the broader pension industry.

Chiemeka also highlighted NGX’s steadfast commitment to collaborating with key stakeholders to amplify the practice of securities lending. He stated that this joint endeavor seeks to stimulate growth and development not only within Nigeria’s capital market but across the African continent.

Abdulkadri Abass, Director of Registration, Exchanges, Market Infrastructure, and Innovation at SEC, delivered an address underlining SEC’s commitment to maintaining an equitable, structured, and efficient market while giving precedence to safeguarding investor interests. He underscored the recent provision within the Business Facilitation Act, permitting Pension Fund Administrators (PFAs) to partake in securities lending, as a crucial step to enriching market depth and liquidity.

Echoing these sentiments, Ibrahim Kangiwa, Head of Investment Supervision at PENCOM, affirmed that the enactment of the Business Facilitation Act in 2023 empowered PENCOM to establish guidelines aimed at facilitating securities lending in collaboration with NGX and other stakeholders. Kangiwa revealed that the commission is actively working on formulating these regulations and processes, with the intention of unveiling guidelines tailored for PFAs by the conclusion of the year.

Onome Komolafe, Divisional Head of Business Services and Client Experience at CSCS, provided insights into CSCS’s contributions to the securities lending market. She offered an in-depth look into the pre-settlement and pre-trade aspects of these activities, shedding light on CSCS’s role in the detachment process for securities lending.

During panel discussions, industry leaders including Oguche Agudah, CEO of PenOps; Babatunde Majiyagbe, CEO of Stanbic Nominees; Peter Omoregie, CEO of CardinalStone Securities; and Aigbovbioise Aig-Imoukhuede, President of the Fund Managers Association of Nigeria, underscored that limited participation in securities lending was partly due to awareness gaps and insufficient securities supply. They emphasized the necessity of intensified collaboration among stakeholders to bolster growth and activity within the securities lending space.

 

 

 

 

 

 

 

 

 

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