NASD Plc has said transactions in equities worth over N1bn have been carried out on its over-the-counter market, which commenced operations last year.

NASD, whose OTC market deals mainly in unlisted securities, said, “By this number, investors’ regulators and brokers can reliably refer to transaction data on deals worth N1bn.

“Typically, off-market transactions are not well-documented and one or more parties to such a transaction might have some doubts as to the veracity of such information.”

It explained that the market had created an opportunity for all stakeholders to accept and use the same data, adding that by doing that it was also creating an opportunity for institutional investors to get a clearer perspective of the true size of the Nigerian capital market.

On the importance of the development, it said, “In reaching this first N1bn benchmark we have had to ease many of the teething pains that come with developing a new market. Participating institutions, registrars and other operators have been indispensable in allowing the market to start growing.”

It added that some participating institutions contributed directly by trading through the system, while many of them had been invaluable in testing, fine tuning and advertising the market.

“We appreciate all players in the OTC market and look forward to more liquidity and transparency in the OTC market in Nigeria,” it said.

According to the NASD, inter-member transfers are now possible on the OTC market. This, it explained, was in recognition of the fact that investors might wish to migrate their portfolio from one participating institution to another.

The NASD, which admitted that before now the process was quite complicated, said, “We have streamlined this process with the support of the Central Securities Clearing System to allow for easy transfer of holdings between institutions. We expect that a transfer from one participating institution to another should not take more than 24 hours.”

The Managing Director and Chief Executive Officer, NASD Plc, Mr. Bola Ajomale, had said in August during a visit to the headquarters of PUNCH Nigeria Limited in Ogun State, that one of the major objectives of its over-the-counter market for unlisted securities was to protect investors from the abuse and exploitation they suffered in the past.

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

Nevertheless, he explained that several strategies implemented by the company were helping it to overcome the challenge.

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

Punch