The Chairman, Association of Securities Dealing Houses of Nigeria (ASHON), Chief Onyenwechukwu Ezeagu, has urged stockbroking companies in Nigeria to align their business models with the newly demutualised The Nigerian Stock Exchange to take advantage of the anticipated opportunities and minimize the risks.
Following its approval to convert into public company by the Securities and Exchange Commission (SEC) and Corporate Affairs Commission (CAC) at the weekend, The Exchange will henceforth operate as a profit making organization under The Nigerian Exchange Group Plc (NGX Group ) with three subsidiaries: The Nigerian Exchange Limited (NGX Limited) NGX Regulation Limited ( NGX REGCO) and NGX Real Estate Limited (NGX RELCO).
Market watchers explained that Demutualisation of The Exchange would lead to an increase in the minimum capital base for Dealing Member Firms and trigger a wave of mergers and acquisitions among stockbroking firms while some may opt out of the business for a new venture to remain afloat.
Addressing Securities Dealers at a Webinar themed “ The future of Securities Dealing Business in Nigeria Post Demutualisation of NSE “ Ezeagu urged ASHON’s members to align their business models with the new market structure.
“ The changes that this new orientation will bring in the business model of the Exchange may impact our own operating models as Securities Dealers. However we anticipate that there must be responsibilities and risks attached to every relationship, some of these risks may crystalize, some are not within our radar, we know that researchers usually expect some serendipity results and make provisions for it just like we try to do in this matter.
“ The Governing Council of the Association of Securities Dealing Houses of Nigeria (ASHON) has been deliberating on proactive measures to take in order to realign our business model and ensure the sustainability of members’ businesses in the changes that may follow the Demutualisation. In this wise, the Council resolved to engage with other exchanges (platforms) with a view to creating avenues for our members to diversify and sustain their businesses and enhance their earnings base. Such platforms include the Lagos Commodities and Futures Exchange (LCFE), the NASD, and FMDQ. It is important for all securities dealers to understand the changes that may come along with the new market structure. We need to prepare well in order not to be caught unawares.
“ Our market has not recovered fully from the global financial melt-down of 2008 due to the activities of various stakeholders in the past, regulatory lapses, policy summersaults, investor apathy among others which may constitute a subject for other discussions. We have had to grapple with insensitivity on the part of government agencies who impose fees and taxes on us at will.
“ The environment has changed and keeps changing. We faced the onslaught of the corona virus pandemic which further spurred the expansion of the Fourth Industrial Revolution, driven by technology, more technological equipment, and internet data and voice call credits are being used more than ever before.
“ We were involved in the Demutualisation process with the Council and Management of The Nigerian Stock Exchange from inception and participating in the various decision inputs and Committee memberships. We engaged vigorously and achieved our aim of protecting the interest of our members. Our expectations on the completion of the demutualization process are that we shall have shares credited to our accounts as shareholders and the demutualized Nigerian Stock Exchange will become an aggressive profit oriented entity. “, said Ezeagu.
Corroborating him, the Immediate Past President of The Exchange and Founder, African Initiative for Governance (AIG), Mr Aigboje Aig- Imoukhuede who spoke on “Managing Securities Dealing Business in a Rapidly Changing Business Environment”, noted that Demutualisation of The Exchange would bring new owners, customers, and skills for stockbroking firms and they must be prepared to face the new challenges and opportunities.
Speaking on “The Place of the Capital Market in the Changing Socio-Economic Order,” the Chief Consultant, Biodun Adedipe and Associates, Dr Biodun Adedipe stated that innovative Capital Market Operators should be incentivized to create market products while business case be made for the government to utilize the market to raise funds for infrastructure.