There are strong indications that The Nigerian Stock Exchange’s ongoing full remote trading may encourage direct transaction on the market by interested investors who must go through their stockbroking firms even as stockbrokers bemoan the impact of uncertainty on the market.
The Exchange’s dynamic trading configuration enables an investor to execute transaction by using access code, generated by his stockbroking firm. But in order to prevent abuse, the stockbroker is responsible for the investor’s transaction in the event of any query from the market regulators.
Responding to media enquiries, the Chairman, Association of Securities Dealing Houses of Nigeria ( ASHON), Chief Onyenwechukwu Ezeagu explained that the policy of allowing clients to trade directly, through their stockbroking firms was expected to be more operational under the current trading regime whereby all stockbroking firms trade remotely.
Ezeagu noted that one of the benefits of full remote trading was that investors would no longer insist on seeing their stockbrokers physically. According to him, one of the rules of engagement for allowing an investor to trade is that such transaction must be routed through his stockbroking firm which is directly answerable to The Exchange.
“ The full remote trading is normal as many of our dealing member firms had been trading remotely over the years before the sudden advent of coronavirus. The current trading atmosphere is a learning curve for the clients. Many of them that enjoy dealing with stockbrokers physically may begin to trade themselves. But they can do this through an arrangement with their stockbroking firm, being a member of The Exchange. “, said Ezeagu.
Corroborating him, Network Capital’s Managing Director and Chief Executive Officer, Mr Oluropo Dada stated that it was a welcome development for a client to trade directly. According to him, it will relieve the stockbroking firm of burden and the transaction will still go through the stockbroking firm. Dada who stated that the ongoing remote trading was an indication of The Exchange’s global stature, however noted that the current situation had made opening of accounts for new clients difficult as Know Your Client (KYC) could not be fully conducted.
Appraising the market, the Registrar and Chief Executive, Chartered of Stockbrokers (CIS), Mr Adedeji Ajadi explained that the recent rally on The Exchange was prompted by investors’ perception that concerted efforts were going on to contain COVID-19 and open up the economy.
“I believe the recent optimism came from what appears to be successes being achieved in several countries to contain Covid-19, as well as the massive stimulus packages being declared and implemented across the globe, including Nigeria. There also seems to be light at the end of the tunnel regarding the likelihood of getting a vaccine for the virus very soon. It appears that all of these factors are creating an outlook that the global community would surmount the challenges posed by Covid-19 perhaps quicker than earlier anticipated. This is reflecting in equities markets globally.”, said Ajadi.
Commenting on the market, the Managing Director and Chief Executive Officer, Compass Investment and Securities, Reverend Emeka Madubuike lamented the implications of uncertainties on investors’ ability to make investment decision. Madubuike explained that institutional investors might have likely accounted for the bulk of transaction at the moment as many individual investors may adopt wait and see attitude. But he expressed optimism that The Exchange’s remote trading was going on without encumbrance.