Transactions on the NASD Plc’s over-the-counter market surged by over 1,900 per cent in the first half of this year, data provided by the Managing Director and Chief Executive Officer, Mr. Bola Ajomale, showed.
Ajomale in a statement at the company’s Annual General Meeting in Lagos on Thursday explained that the company saw a steep increase in traded volumes in 2014 with the total number of trades facilitated by the OTC platform at N2bn in December 2014.
Ajomale said, “The achievement of this number becomes clear when compared to a trade value level of N1bn as of September 2014, 15 months after the market opened,” adding that the steep trajectory became even stepper post-2014 with trades worth over N40bn facilitated so far in 2015.
“I am pleased to inform you that as of half-year 2015, NASD had hit a value traded number in excess of N40bn. Management is convinced that this number is still not fully representative of the potential of the OTC market in Nigeria and we aim to close the year with a more representative number.”
Reviewing the company’s financial performance in 2014, he said the NASD earned N11.6m as trading commission as against N400,000 in 2013. Registration fees, however, fell by 133 per cent to N12.4m in 2014 from N29m a year earlier.
“This reduction (in registration fees) is expected as the number of participating institutions who have not yet joined the market diminished,” he explained.
According to him, the general administrative costs have remained stable at N113m in the review period in comparison with N118m in the preceding period.
Ajomale, who stressed that the market had made significant progress, explained that through 2014, the NASD continued to fine tune and expand on market rules and practice guidelines to create more order in the system.
He said, “As more operators became familiar with the trading system, we felt it was appropriate to allow the market operate with price bands. We therefore introduced a 15 per cent price band, which has been well-received and has given asset managers more confidence of price stability.
“To build capacity among professionals who operate on the market, we introduced a series of training courses for would-be operators to the market. As of December 2014, we had conducted training courses for over 300 market operators.”
Ajomale, who said the company was exploring ways of institutionalising the training needs of operators in the industry, explained that also in 2014, the NASD OTC successfully migrated from it pioneer proprietary bilateral inter-dealer trading system, which served the market for eight months, to a platform built by NASDAQ OMX and shared with the Nigerian Stock Exchange.
Post-2014, he explained that a rule on trading in unlisted securities, which was published in April 2015, by the Securities and Exchange Commission, made it mandatory for all public securities to be traded on a SEC-recognised platform.
“The rule effectively shuts down all non-regulated trade points and restricts the transfer of unlisted securities to authorised participating institutions,” he said.
“Our universe of tradable securities has now expanded to more than 300 securities and more market operators have been encouraged to seek participation in the OTC market.”
He expressed optimism that the NASD OTC would continue to expand.
The Chairman, NASD, Mr. Olutola Mobolurin, in his statement at the AGM expressed optimism about the future outlook of the OTC market, adding that he expected the new SEC rule to impact the market positively.
Mobolurin said, “The OTC market has made substantial progress and is gradually becoming a market of choice as it gains popularity in Nigeria. With the release of new rules on unlisted securities by SEC, we are confident that NASD will achieve its strategic goals.
“We continue our relentless pursuit of becoming a globally renowned OTC market that delivers value to all of its stakeholders.”
The NASD chairman added that the return of initial public offerings of unlisted securities was anticipated in the wake of the liquidity afforded by NASD for such securities.
Punch
