NSE transformation must anchor on government ongoing economic agenda, says SEC

The proposed demutualisation of the Nigerian Stock Exchange (NSE) must follow a fair, transparent and credible process that accommodates stakeholders’ interests as well as supports government’s on-going economic transformation agenda, Chairman, Securities and Exchange Commission (SEC), Udo Udoma, said Wednesday.

Demutualization of a stock exchange is a process a non-profit member-owned mutual organization is transformed into a profit-oriented shareholder corporation.

Mr. Udoma, who was speaking at the formal presentation of the Report of the Technical Committee on the demutualisation of the NSE in Abuja, said a transparent and credible process was imperative to build confidence and properly position the Exchange for global competitiveness.

The Commission Chairman noted the effort of the technical committee towards realizing the transformation agenda, assuring that the report would be studied thoroughly and its recommendations used in fashioning appropriate framework for the demutualisation exercise.

He said right from inception of the Board, the Commission has always focused on reforming the capital market to make it a more transparent and internationally competitive market, adding that appropriate rule changes have also been introduced, while a new code of corporate governance was approved effective from April 2011.

“We have taken a number of measures to strengthen and improve governance of the Nigerian Stock Exchange to ensure that market operations are conducted with a high level of transparency, and in accordance with the highest global standards,” Mr. Udoma said.

“To sustain this improved governance, it is important that we ensure that the Exchange is demutualised by a process that is fair and open, transparent and credible. The process must also take into account the interest of stakeholders. The process must be one that supports the economic transformation agenda of the Federal Government as well as safeguard Nigeria’s national interest.”

Chairman of the Technical Committee, Asue Ighodalo, had noted the significance of a demutualised securities exchange, pointing out that this has the potential to fast-track the development of the exchange, deepen the capital market, improve its corporate governance and competitiveness, though demutualisation cannot, in itself, serve as the magic pill for all operational lapses in an exchange.

Mr. Ighodalo urged the Board of the SEC to thoroughly study the report and act on the recommendations as a desirable step toward the holistic transformation of the NSE in order to improve its efficiency and impact positively on investments.

Warning against adopting demutualisation models and other experiences from other countries that do not promote the country’s interest, Mr. Ighodalo said the Committee believes there is no “one-size-fits-all” approach to demutualization, adding that whatever model and processes are adopted by the Commission should give due consideration to the peculiar Nigerian context as well as circumstance.

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