Peter OBIORA InvestAdvocate

Lagos (INVESTADVOCATE)-It is pertinent to set up Alternative Exchanges before the demutualisation of the Nigerian Stock Exchange (NSE)

Mazi Okechukwu Unegbu, Chief Executive Officer (CEO) of Maxifund Investments and Securities Limited, Wednesday said this at the Zenith Bank Plc sponsored Finance Correspondent Association of Nigeria (FICAN) bi-monthly forum on the topic: “Banks’ Financial Performance in 2011 and Q1 2012: Implication for the Capital Market” held in Lagos Nigeria.

According to Unegbu, demutualisation is not good without support from other entities; while advising the setting up of alternative Exchanges before the Demutualisation of the NSE to provide an alternative and encourage a healthy competition. “There should be alternative Markets to complete the process” he said.

“There should be an Alternative Market incase the Capital Market fails, Regulators have to do a rethink of regulations both at the Money and Capital Market” Unegbu said.

Unegbu said Nigeria has a single Capital Market and advised that the Investment & Securities Act (ISA) should make provisions for other Capital Markets or Capital Trade Points to be set up.

“These could be set up in Places like Kano, Aba, Ibadan; those towns where we have very small scale businessmen, they could set up a Capital Trade Point for them to work; the problem lies with the non-existence of Alternative Markets” he said.

“When you demutualise, it means the process through which a member-owned Company becomes shareholder-owned, such Company is susceptible to failures and once it fails, if there is no alternative, our stocks will be very illiquid and investors cannot easily raise money; but if there are alternative means that could complement, investors can go to other Markets; while the other one is being sorted out; just like it happened with the Banks, some failed and others acquired them” Unegbu said.

On Tuesday February 28 2012, Nigeria’s Securities & Exchange Commission (SEC) said the 21 Member Technical Committee led by Asuerinme Ighodalo had submitted its Report on the demutualisation of the Nigerian Stock Exchange (NSE) to it in Abuja Nigeria.

Embattled Arunma Oteh, the Director General (DG) of Nigeria’s SEC said that the Commission will look into the Report as Apex Capital Market Regulators in Nigeria and come out with a way forward.

As earlier reported, on September 22 2012, Senator Udoma Udoma, Chairman of Nigeria’s SEC inaugurated a 21 member Committee Chaired by Asuerinme Ighodalo, Legal Practitioner to help advice on the demutualisation of the Nigeria’s Exchange.

Udoma said the Committee was set up to advice the Commission and not that of implementation.

The 21 Member Committee consist of Experts in all the relevant disciplines, including Lawyers, Accountants, Investment Bankers, Stockbrokers, Market Operators, Regulators and from the Academia.

The Committee has among their terms of Reference, a review of the current structure and ownership of The NSE; examine regulatory, ownership, management, operational, governance and financial issues in demutualisation of Exchanges.

Other references are the review of various demutualisation models and experience including; valuation model for demutualisation, recommend best demutualisation model for the Nigerian Market and recommend practical timeline for the completion of the demutualisation of the Nigeria’s Exchange.

Apart from these, the Committee will also recommend steps which are necessary and appropriate for the demutualisation of the NSE, examine potential conflict of interest and measures to deal with them, in the demutualisation of the Exchange and to examine any other issue necessary for the demutualisation.

The Report submitted in February 28 came almost five (5) months since the Committee was inaugurated September 22 2012 in Lagos Nigeria.

It is now three months since the Committee submitted its Report and nothing has been heard on it anymore.