Stakeholders urge financial system overhaul for market growth

Stockbrokers under the aegis of past presidents of the Chartered Institute of Stockbrokers (CIS), have called for urgent overhaul of the entire financial system, and the creation of a savings institute to grow the stock market to make it globally competitive.

Also, they underscored the need to intensify advocacy to draw governments and other regulators’ attention to the benefits of investment through the capital market.

Specifically, the Chairman, NASD Plc, Tola Mobolurin, noted that the crash of Nigeria’s stock market from 2007-2008, was largely due to government and market regulators’ complacency as much as the stockbrokers and investors.

Mobolurin, who spoke at a dinner organised by the CIS in honour of the past presidents in Lagos, at the weekend, said there is a need to establish a savings institute that would help in local capital formation and grow domestic investment capacity.

According to him, the market is also in dire need of private equity fund, and hedge fund in naira denomination that would generate better returns to shareholders.

Private equity typically refers to investment funds, generally organised as limited partnerships that buy and restructure companies that are not publicly traded. it is a type of equity and one of the asset classes consisting of equity securities and debt in operating companies that are not publicly traded on a Stock Exchange.

He stressed the need for active collaboration among stakeholders to boost efforts aimed at repositioning the market for sustainable growth, adding that if all had played by the rules, there would not have been laxity that led to regulatory failures with attendant market crash in the past.

However, he expressed optimism that the market can bounce back if the entire financial system is overhauled without further delay.

“We must create savings institutions immediately. We are in dire need of private equity fund and hedge fund in naira in the national interest. We need institutions that have deep pockets.

“There should be an end to dichotomy between banks with capital market operations and banks with non-capital market operations. We must reactivate the bond market which we pushed away because of lack of interest. Thriving capital market is needed to build the economy,” Mobolurin said.

CIS President and Chairman of Council, Adedapo Adekoje, also stressed the need for unity of purpose among stockbrokers to strengthen advocacy role.

He specifically reminded that, “We still have the Chartered Institute of Securities and Investment (CISI) Bill, pending with the National Assembly, and this also requires substantial resources to push through. Our plan therefore is to urge all of us to support, both financial and otherwise, to pursue thise noble cause of our Institute.”

The Acting Director-General, Securities and Exchange Commission (SEC), Ms Mary Uduk, advised stockbrokers to get the heart of government on policies that would revive the market through advocacy.

Uduk explained that SEC had enjoyed the support of many stockbrokers, who had served on various committees of the institution.

In his contribution, Chapel Hill Denham’s Chief Executive Officer, Bolaji Balogun, advised stockbroking firms to consider the option of business combinations as a strategy to remain in business, adding that this would bring about synergy and enormous benefits against the current situation where many houses are inactive.