NSE’s Demutualisation Meets Mixed Reaction

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Mixed reactions at the weekend trailed plans by the Securities and Exchange Commission  (SEC) to demutualise the Nigerian Stock Exchange (NSE).

Demutualisation takes place when a stock exchange allows members of the public to be part owners through the sale of shares.

While some stakeholders who spoke with newsmen at the weekend commended SEC for its efforts to implement the policy, others alleged that  the commission did not consult widely before inaugurating the technical committee charged with the responsibilities of developing an appropriate framework for the demutualisation of the NSE.

The Managing Director and Chief Executive Officer, Maxi Fund Investments & Securities, Maxi Okechukwu Onegbu said : “You don’t  sell what you don’t own. That is not possible. How can you wake up and say you want to sell what is not yours? They (SEC) need to engage dealing members. We don’t need to start ruffling feathers. Good corporate governance should be followed in this regard, BBC business news reports.”

He said the SEC board was wrong to have inaugurated the technical committee in the first place without consulting widely with dealing members, adding that the NSE council was not “properly constituted.”

Onegbu  added :”What is the basis for international best practice? What is the basis for world-class capital market? There is a problem. We need to tell ourselves the truth. Investors’ confidence is low. Let’s restore investors’ confidence to the market first. Let’s deal widely with dealing members of the exchange”.

But the Managing Director of Trust Yields Securities Limited, Alhaji Rasheed Yussuff,  commended the steps so far taken by SEC to demutualise the Nigerian market. Explaining further, Yussuff said the demutualisation agenda should be supported by all.

He also used the opportunity to explain that the concept was expected to open opportunities for the Nigerian market and “widen its shareholders’ base”.

Another dealing member of the NSE who spoke on  the condition of anonymity described the proposed demutualisation agenda  as a  “good concept”, but advised SEC to engage all stakeholders and embark on an enlightenment campaign.

The source  said: “The issue of demutualisation is very good but sensitive. The concept is good but some stakeholders are suspicious. SEC needs to clear the air adequately by embarking on an enlightenment campaign.”

Director-General of SEC, Arunma Oteh, explained recently that demutualisation  would  enhance  the nation’s  market, adding that it   would come with a lot of benefits, among  which are greater independence of management, stronger corporate governance, improved investor participation in the ownership and management of the exchange and operational efficiency.

Others are increased resources for capital investment and access to global markets.

The commission explained that it had obtained technical assistance from the International Finance Corporation through First Initiative, with the engagement of a consultant to provide advisory and capacity building services for the commission in particular and the market as a whole especially in the area of demutualisation.

Oteh, who spoke in an interview with The Tide source disclosed that capacity building workshop   had been scheduled to begin in Lagos on March 9, 2012 as part of strategies to demutualise  the exchange.

Under the proposed agenda, NSE is expected to list its own shares like other quoted companies, raise funds if necessary, expand its operation when necessary, and make profit and pay dividends  to its shareholders at the appropriate time.