Members of the Nigerian House of Representatives Committ ee on Capital Market have expressed optimism that the Nigerian Stock Exchange (N S E), which is currently experiencing a downturn occasioned by the global economic
meltdown, will soon regain its vibrancy if all stakeholders play by the rules.
â?This is the most crucial aspects of our role, on what to do to make the marke t re-bounce. We must ensure that the rules of the game are adhered to regardless
of who is involved. NSE as a self-regulatory body, if it chooses to act on broke r A and refuse to act on broker B when it breaches the law, there is no way the m a rket will re-bounce,â? Ahmed Aliyu Wadada, Chairman of the House Committee, who led other 15 members, told stockbrokers at the floor of the Exchange.
He said the lawmakers, as part of their oversight functions, were at the market to rub minds with the stockbrokers on ways of reviving the capital market stress i ng that whatever needed to be done to achieve this would be carried out.
â?We are willing and competent to do what we need to do to make the situation b etter, but the greater percentage of the suggestions on how to achieve this will
need to come from you the market operators,â? Wadada added.
In her remark, the Director General of the NSE, Ndi Okereke-Onyiuke, solicited t he support of the lawmakers for the passage of the bill that will soon be presen t ed to the National Assembly on the proposed setting up of the Asset Management C o mpany (AMC) by the Central Bank of Nigeria (CBN) as part of the measure to reviv e the market.
â?The CBN has taken up the challenge with the proposed AMC. It will be good for the market and for the nationâ?s economy if it is given accelerated hearing and approval. When it becomes fully operational AMC will take the liabilities from t he banks, which will now be converted into promissory note that will serve as li q uidity. We believe the market will re-bounce and is beginning to re-bounce but s l owly,â? the NSE boss said.
The apex bank is working out a draft bill for the setting up of AMC to buy off b anks’ bad loans. It hopes that AMC will help restore liquidity to the banking in d ustry. But this cannot materialise without the approval of the National Assembly .
The Chairman of the Association of Stock broking Houses in Nigeria (ASHON), Rash eed Yusuff, lamented that apart from the global economic meltdown, the utterance s of many government officials have contributed to further heat up the system.
He said rather than pointing accusing fingers, efforts should be geared towards finding urgent solution and learning from other countries on how they were able t o overcome the problems.
Yusuff said there was nothing fraudulent about what happened in the market. Even though there might be a few infractions the majority of operators played by the
rules.
The stockbroker emphasised that the economy cannot be improved without first rev iving the capital market which he described as the engine room of the nation’s d e velopment with about 5 million shareholders.
Yusuff said: â?All over the world margin account is use as a financial instrume nt, to grant loan for investors to buy stocks but it is very new in Nigeria. Eve n after the present crisis, margin account will remain with us.
â?The margin means you go to the banks to put some money down, about 30%. The b ank will now give you 70%, but the whole of the money is still with the banks, t h e broker will not hold anything The 30% will serve as the security and there is n othing fraudulent about what happened. It is only that the brokers and the banks are only victims of the global economic meltdown.â?
