NIGERIA: Capital Market Regulators Mull Reduction of Transaction Cost

As part of efforts to encourage more participation in the Nigerian capital market, regulators of the market have disclosed plans to  bring down the cost of transactions.
The Director General, Securities and Exchange Commission (SEC), Ms. Arunma Oteh said this while speaking at the Nigeria Summit organised by the Economist magazine in Lagos.
She explained that SEC is currently working with the Central Securities  Clearing System (CSCS) and the Nigerian Stock Exchange (NSE) on a transaction cost analysis. The outcome of the analysis, according to her, would help determine what the appropriate transaction cost to be charged by operators.
“We are working with the stock exchange along with the CSCS to sponsor the transaction cost analysis. This is because the issue around cost of transaction in Nigeria is an issue that we have heard about and I think it is important that we have the exact data. When the volume of transactions goes up, the brokers and other participants would be more inclined to reducing cost,” the SEC boss  said.
According to her, in the last six years, SEC had reduced cost of transactions twice.
“I think the transaction cost analysis would be concluded very soon and there would be more flexibility,” she added.
Oteh said with the introduction of market makers in the capital market, there has been a 20 per cent increase in daily trading volume.
Also speaking at the forum, the Chief Executive Officer, African Capital Alliance, Mr. Okechukwu Enelamah urged financial institutions to invest in the real sector of the economy.
On his part, the Managing Director, Goldman Sachs, Mr. China Onyemelukwe revealed that investors in emerging markets are always look out for the ability of the potential investing company to absorb and manage foreign exchange risk.
This, he described, as a very key factor in taking investing decisions in emerging markets.
Also, the Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, while speaking on the performance of the Nigerian economy noted that “If you look at the Nigerian economy, wholesale and retail trade constitute almost 75 per cent of the GDP which means that this economy trades actively tangible goods.”
He stressed the need for regulations to protect investors from pyramid schemes.

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