Planned electronic IPO tickles stakeholders
Capital market stakeholders have described the planned introduction of electronic initial public offers (e-IPOs), by capital market regulators as a step in the right direction, saying the initiative would boost market participation, and enhance liquidity in the market.
The stakeholders, who admitted that the Nigerian Stock Exchange (NSE), has been at the forefront of deploying technology to boost stock market development, also stressed the need for market operators to deploy technology in their services to boost market growth.
As part of the arrangements for the automation of public offering, the NSE recently held training on modalities for e-IPO, and the functionalities at the Exchange that will facilitate the automation.
Besides, the Securities and Exchange Commission (SEC), NSE, Central Securities and Clearing System (CSCS), and six other organisations, have formed a committee to discuss the modalities involved in issuing e-IPOs in the country.
The Acting Director-General, SEC, Mary Uduk, said Nigeria cannot afford to be left behind as capital markets are moving towards e-IPOs.
The full automation of primary issuance will involve automation of the process, approval, documentation, subscription and allotment of all issues, especially IPOs and public offers.
With this, investors will be able to subscribe and make payment for IPOs and public offers online with such orders being matched and allotted electronically, and directly to the investment accounts of the investors at the CSCS.
The full automation will enable the primary market to operate within a designated transaction cycle, possibly within the T+3 four-day trading cycle currently being operated at the secondary market.
Investors will also be able to monitor and change their orders within a designated period, while subscribers with personal access to the Internet and online stock-broking trading portals can make direct subscriptions from anywhere.
The Managing Director, Meristem Securities Limited, Saheed Bashir, said the initiative would ultimately improve time in the market, and make the issuing process become more seamless, as the problem of distribution and collation of subscription forms will be completely eliminated.
“Here, time to market reduces and it makes transactions faster and cost effective. Instead of printing papers, it will make transactions quicker and faster. Technology and artificial intelligence are the way of tomorrow, and we cannot rely on paper that is of yesterday,” he said.
A former President, Association of Issuing Houses of Nigeria (ASHON), Sonnie Ayere, said: “We are also looking at better ways to serve our clients by taking advantage of this initiative. With this, people can now apply for IPO using online services, instead of having to send their prospectuses everywhere in written form, again it reduces the cost of issuance.
“Can you imagine the cost of printing materials? If you send half of all the prospectuses online, it will reduce your cost of printing by almost half. The NSE is working with the association and other stakeholders to make sure that this initiative is introduced in the market.”
Also, the Managing Director of Vetiva Capital Management Limited, Chuka Eseka, explained that the initiative would shorten the period of offer completion, and make the whole process efficient.
“It will make it easier to reconcile offers and enhance efficiency. If an investor puts money down today to buy shares, with this process, he does not need to wait for so long before he can have access to the investment.”
The National Coordinator, Independence Shareholders Association Nigeria, Adeniyi Adebisi, added: “Technology is very useful in moving the world forward. We will support it, and it will be very useful to the market. I will support anything that will make us belong to the technology world.
“Look at the prospect of e-dividend, it is not everybody that has keyed in to the e-platform, but it has been useful for some investors as regards prompt payment of dividends.”