By Agency Reporter

Thursday, 2 Dec 2010

To reduce the time of issuance for government and corporate bonds and enhance the price discovery process, the Securities and Exchange Commission has introduced new rules on book building and shelf registration.

Addressing members of the United State‘s House of Representatives Committee on Financial Services recently, the Director-General of the Securities and Exchange Commission, Ms. Arunmah Oteh, said the new rules had shortened the average issuance time line in the market and improved price discovery.

According to her, the new rules will complement the first class sovereign bond market, which the Federal Government has nurtured over time and attract more activities to the market.

She said, ”Given the importance of the fixed income market to both infractural and industrial development and also as a key asset class for investors such as pension funds and insurance companies, the commission is working assiduously with various stakeholders to develop a strong and virile bond market.

”To this end, the commission is enhancing the framework for bond issuance and has introduced rules on book building and shelf registration and simplified disclosure rules for fixed income, which are sold to institutional investors and high net worth individuals.

“These rules have shortened the average issuance time line in the market and improved the price discovery process for securities.”

On the effects of the new rules on the market, Oteh said, ”These and other measures have increased the appetite for bonds and will complement the first class sovereign bond market that the Federal Government has nurtured over the last seven years.

“We expect more fixed income activities in view of a recent revision of the tax regime to eliminate tax discrimination, which previously existed between sovereign bonds, on the one hand, and sub-national bonds on the other hand.”

Source: Punch