If there is anything that the capital market community would have loved to be a part of, despite the economic gloom in the nationâ€™s highbrow Broad Street, it would have been to join in the celebration of Nigeriaâ€™s 50th anniversary as a sovereign nation.
The celebration, like some that had been encountered in the not-too-distant past, would have involved popping champagne with some backslapping and messages of hope to the downcast market operators, whose offices are no longer besieged by expectant investors.
There are many reasons why the exchangeâ€™s former council and management led by Aliko Dangote and Prof. Ndi Okereke-Onyiuke respectively, would have rolled out the drums, even if with a less lousy budget.
The Nigerian Stock Exchange, then known as the Lagos Stock Exchange (LSE) was established in 1960, shortly after Nigeriaâ€™s independence by some of the nationâ€™s foresighted business minds, including Sir Louis Ojukwu and Akintola Williams, doyen of the nationâ€™s accounting profession- who is today the only surviving signatory to the original documents, among others.
These men of means changed a situation where the nationâ€™s elites, besides bank savings undertook long-term investments on the London Stock Exchange (LSE), through stockbrokers in that country.
It is not just Nigeriaâ€™s independence that would not be celebrated by the NSE, but five decades of existence as Nigeriaâ€™s economic barometer.
Reason: Mrs. Okereke-Onyiuke was fired by capital market policeman- the Securities & Exchange Commission (SEC), citing mismanagement and N11 billion fraud, leading to insolvency. Dangote stepped down pending the conclusion of a suit challenging his emergence on August 6, 2009 as President of the NSE, by shareholders of African Petroleum Plc. The exchange is now under an â€œinterim national governmentâ€ with a bean counter and forensic expert- Emmanuel Ikhazoboh as administrator, and Bullama Manu, former banker as interim head of council.
Their assignment is clearly to ensure that the exchange continues as a going concern, while sifting through the books of the NSEâ€™s account with the help of
KPMG, a firm of chartered accountants and the law firm Aluko Oyebode & Co. to produce an interim report first before the final one is put together. Both firms started work on August 5, 2010, by securing data and document sources.
Between 1961, when actual trading started on the bourse; 1977 when its name was changed to the present one, following a Federal Government committee; to 1999 when Okereke-Onyiuke took over as DG from Hayford Alile; and today, keen followers of events would agree that things really have changed for good and ill.
Within the period, total market capitalisation of the NSE reached N292 billion in 1997 and climbed to its all-time-high of N12.6 trillion on March 5, 2008, before bowing to the vagaries of global financial crisis, resulting in the flight for safety by high net worth investors.
Within the period also, the benchmark All-Share-Index, introduced in 1984, and which started with 100 basis points rose to 7,668.07 in 1997, from where it climbed over the next 10 years to 66,371.20 also on March 5, 2008.
Over a 50-year period, the NSE, according to a report co-authored by Proshare and MBC News Corp, both online financial markets media, has maintained a monopoly on â€˜Broad Streetâ€™.
â€œThis status was briefly broken when the Abuja Stock Exchange, later reconfigured as the Abuja Stock and Commodities Exchange (ASCE), was set up under the administration of the late General Sani Abacha, following the report of a committee headed by investment banker and capital market expert, Dennis Odife, then chief executive of Centre Point Merchant Bank.
One of the arguments for the setting of a competing Exchange as contained in the Odife Panelâ€™s report was premised on the structure of leadership, both at the Council of the NSE and its management team.
Following from the committee report, the then Director General of the SEC, Sulleyman Ndanusa, with the support of the late General Sani Abachaâ€™s administration took an unprecedented step of issuing an order of removal of Abdul Razak as the President of the NSE and Ndi Okereke-Onyuike, the Director General. The removal bid was however stopped by then President Olusegun Obasanjo.
â€œThe action was premised on the refusal of the Nigerian Stock Exchange to revert to its original name: The Lagos Stock Exchange in order to accommodate the newly formed Abuja Stock Exchange.
â€œThe matter went to court and was eventually settled out of court after several months of a bruising â€˜warâ€™. This was the first and most openly played out leadership challenge for the control of the soul of the capital market ever witnessed in the Nigerian financial market.â€
The NSE had argued at the time that there was no need to order a change of name, since some other quoted companies with no affinity to the government or its agencies already used Nigeria as prefixed. Some of them include: Nigerian Breweries Plc and Nigerian Bottling Company.
Although, the exchange opened for trading in 1961with just 19 securities valued at N80 million, growing over the years with government support now and again, the transformation of Nigeriaâ€™s investment climate since May 29, 1999 has been quite monumental.
Within the period, the nationâ€™s financial system experienced significant rejuvenation helped by the commencement of democratic governance in May 1999, a feat â€œattributable to the pursuit of economic deregulation, privatisation, commercialisation and the basic shift from public sector led to private sector led economic development activities,â€ according to one operator.
i) The Automated Trading System: This was introduced by the NSE â€œto enhance market transparency amidst the growing volume of transactions. The ATS is one of the most outstanding innovations in the securities market in Nigeria. It works on the queuing system where all brokers have equal access to information available for purchase or sale of securities.
â€œThe ATS is effectively interfaced with the automated Clearing Depository and Settlement System (CDS) of the CSCS. This has facilitated a T+3 (transaction day, plus three days) settlement cycle. This simply means that the clients will have access to the investments and/or dispose their investments within four days of transaction period. In fact, the T+3 transaction cycle is well above the emerging markets standard, which stipulates T+5 transaction cycle.â€
ii) The Central Securities Clearing System: To achieve the gains of the ATS, the
NSE conceived the CSCS as a subsidiary in 1997 as primarily a settlement arena for the achievement of the T+3 settlement cycle. It commenced full operations two years later on April 14, 1999.
The CSCS is interfaced with the trading engine and automatically receives data relating to trades as they occur for settlement. The CSCS is also responsible for dematerialization of Share Certificates of quoted companies into the central depository.
iii) On-Line Trading: â€œThe advent of the ATS created a greater challenge to The NSE. This led to the connection of Abuja, Port Harcourt, Kano and Yola branches to NSEâ€™s Central server in Lagos. iv) Remote Trading: â€œThe NSE introduced remote trading in 2004 as part of its resolve to create an efficient market.
Remote Trading is a system where brokers trade from the comfort of their offices. Their computers are connected to the main trading machine through one of the safest connection device, fibre optics. It guarantees safe delivery of data from the main frame of the Trading Machine to the computers in the brokerâ€™s office.
v) The Trade Alert: â€œIn 2004, The NSE proposed the introduction of the Trade
Alert as a means of protecting the securities market against ever increasing threats from fraudsters.
â€œThe Trade Alert, when subscribed to by an investor, sends a notice on the investors mobile cell-phone indicating elaborately all transactions taking place in his account at the CSCS. The objective of the Trade Alert includes, stopping unauthorized trades before they happen.
Vi) Establishment of the Abuja Securities and Commodities Exchange (ASCE): â€œThe
ASCE is an organized market that facilities for trading in commodities and securities. Commodities are products or raw materials such as petroleum, cocoa, rubber, palm oil, palm kernel, cotton, groundnut, soybeans, solid minerals, etc.
Transactions in commodities are to be made through contracts, which have finite lives and delivery date. Actual trading commenced in 2006.
Vii) Introduction of Code of Corporate Governance for public companies: â€œThe Code of Corporate Governance for public companies was introduced in 2003. The
Code essentially provides for the conduct of the affairs of companies. It deals with issues concerning Board of Directors, shareholders, Audit committees, etc.
The code is expected to enhance corporate discipline, transparency and accountability. The code is not mandatory.