By Gbenga Agbana  Friday, 20 Aug 2010

 

The Institute of Capital Market Registrars has reacted to the purported plans by the Central Bank of Nigeria in conjunction with the Securities and Exchange Commission to set up a common share registry for all banks and companies in the country.

 

In a communiqué issued at the end of its meeting , the institute said the plan, if implemented, would create a monopoly, which would run contrary to the SEC‘s direct responsibility to guard against anti-competition practices in the capital market.On the issue of insider dealing, the Registrar of the institute, Dr. Walker Ogogo, said, ”We don‘t allot shares. We don‘t warehouse shares. Issuing houses do.”

 

The communique said, ”Bank equities currently account for about 66 per cent of the market capitalisation of the Nigerian Stock Exchange of the Nigerian Stock Exchange. The implication of ceding all bank equities to a single entity would be to immediately create a monopoly, which runs contrary to the SEC‘s direct responsibility to guard against anti-competition practices in the capital market.”

 

Ogogo, who spoke with some capital market correspondents on Thursday, also noted that the proposal by the regulators might create problems for the market, as some shareholders‘ records might be missing.

 

The communiqué added, ”Over time, registrars have been encouraged to contribute to the development of the Nigerian capital market by developing the capacity; human, material and financial, to serve the growing number of shareholders and quoted companies in Nigeria. The effect of stripping the bank securities from registrars would be immediate creation of redundant capacity, ultimately resulting in shrinkage of registrars‘ branch network, staff and other service complement.”

 

In a letter to the SEC recently, the institute said, ”The belief that registrars could only be manipulated by their parent companies may not be really correct. A registrar could actually be more susceptible to manipulation from clients to which they are not related by ownership. This is based on the fact that being a purely business relationship, failure to compromise with a client company may lead to a registrar losing that account to competition.

 

“However, with improved supervision by the SEC, we have noted a significant improvement in the attitude of market participants, to their responsibilities to the investing public.”

 

Source:Punch