The Managing Director and Chief Executive Officer, NASD Plc, Mr. Bola Ajomale, has said one of the major objectives of its over-the-counter market for unlisted securities is to protect investors from the abuse and exploitation they suffered in the past.

The NASD MD said this on Thursday when he visited PUNCH Nigeria Limited in company with NASD’s Chief Financial Officer, Mr. Titus Oladunni; Manager, Legal and Compliance, Mr. Frank Omizu; and Research Analyst, Mr. Lateef Adenuga.

Ajomale explained that in the period leading to the financial crisis, “there was a lot of abuse in the market,” a situation he said led to the establishment of NASD Plc to create liquidity and encourage transparency in the OTC market.

He said the situation was so bad that organisations were passing false information to investors without the regulators or operators intervening.

Citing an example, he said, “There was a time a bank was telling people, ‘we made 1,000 per cent gain in the past, put your money with us and you will make a thousand per cent interest. That bank does not exist today.’”

According to him, in such an instance, the market regulators and other stakeholders should have stepped in.

Ajomale, however, said following the flurry of issues by companies and the crisis that followed, the market regulators and operators realised the importance of enhanced regulation and better governance and were more responsible.

He added that the crisis exposed the fact that while the Nigerian Stock Exchange had existed for over 50 years, there was no market for unlisted securities.

That realisation and the level of exploitation holders of unlisted securities had suffered created a need for the NASD OTC market, he said.

“The condition was right, the regulation was right and the need was there. And we are filling a gap; not duplicating what the Nigerian Stock Exchange was doing,” he added.

Ajomale disclosed that since the company commenced operations in 2013, it had recorded significant growth in the level of participation.

Currently, he said the shares of 17 companies were currently being traded on the platform with FrieslandCampina WAMPCO stocks the most traded.

According to him, 77 stockbrokers are currently registered to trade on the platform out of about 300 brokers in the country with 23 issuing houses and about 103 traders doing business on the platform.

He, however, said the potential of the platform was huge considering that about 17,000 companies were registered as public liability companies, and with the exception of about 200 listed on the NSE, all their shares could be traded on the NASD OTC.

He explained that steps had also been taken to protect investors. First, according to him, is the insistence that only the shares of companies that are registered with the Securities and Exchange Commission can be traded.

In addition to this, details of transactions carried out can be obtained from its website, giving investors an opportunity to determine the actual price at which their shares were sold, something that was impossible before now.

He also said an investor protection fund was likely to be established when the market becomes larger and the black market ends.

Ajomale, however, said the low level of awareness about the platform and the fact that it was a parallel market to the NSE, was a big challenge.

According to him, investors, companies and market operators had at various points been confused about NASD’s activities, highlighting the need for the creation of awareness about its functions.

He, however, said it had implemented several strategies including the use of newsletters to tackle the challenge.

“Slowly, we are beginning to reach out to the wider audience.”

Punch