Dematerialisations of share certificates in the nation’s capital market is still low, says Chef Executive Officer, NASD Plc, Mr. Bola Ajomale.
Speaking to newsmen in Lagos, he said “ One of the challenges being faced in the capital market is that the level of dematerialisation of share certificates is still low ; it currently stands at about 2.5 per cent, which is not encouraging. This year, we hope it will increase further as we continue to enlighten investors on the advantages of dematerialising their share certificates.”
Dematerialisation of share certificate is the process of converting physical share certificate to electronic platform. In Nigeria if an investor wants to dematerialise his share certificate, he needs to open a demat account with the Central Securities Clearing System, CSCS Plc and surrender his physical share certificate and in turn gets electronic shares in his demat account.
On NASD’s contribution to the capital market, Ajomale said “We have given a lot of shareholders the opportunity of valuing their investment. It has open lien opportunity to them and this is going to open people’s cash. Also, we now have a reference point when trading of unlisted shares could be linked to. Furthermore, shareholders now get e-statement like what obtains on the Nigerian Stock Exchange for listed securities.”
Speaking on the development of NASD Over the Counter, OTC platform, he said “During our first 6 months of operation in 2013, we focused our efforts on the structures that will support a robust OTC market (such as processes, on-boarding participants and developing rules). In 2014, we started to load up the securities that will trade on the market. We migrated market trades from our Bi-lateral interdealer trading system (BITS™) to the NASDAQ OMX X-Gen platform. The former platform is now free to be used for other asset classes that we shall roll-out in 2015.
The NASD boss further disclosed that the market closed the year 2014 with a nominal value of ¦ 41 billion and total market capitalisation of ¦ 590 billion. “ Total number of issued shares that can trade on the market is therefore 83 billion shares. Dematerialisation levels were still low at 2.05 billion shares or 2.48%. We expect that this will increase significantly as shareholders become more aware of the safety and liquidity advantages of dematerialization” he added.
Commenting on trade activity, Ajomale said “120 million shares worth 2.32 billion were exchanged in 417 deals by investors on the NASD OTC Market from January to December 2014 compared to 239,165 shares worth ¦ 76 million that were exchanged in 34 deals from July to December 2013. The market continues to grow in size and intensity each quarter of the year.
Vanguard
