A busy year for NSE
At the beginning of this year many investors walked into Customs Street with cautious optimism. Amid their fears, it rather started on a busy note for the Nigerian Stock Exchange (NSE) with increased activities across product development, regulation, and sustainability initiatives, among other.
As the pioneer Exchange in Nigeria, the NSE continued to provide issuers with bespoke financing options that placed them in vantage position to compete regionally and globally.
The Nigerian Stock Exchange listed a firmly underwritten N9billion bond for Forte Oil as part of the company’s planned N50billion bond issuance programme. The bond issuance was in line with Forte Oil quest to expand its franchise.
Aside this, Medview Airline and Jaiz Bank were listed on the NSE by introduction. Debt Management Office (DMO) on Thursday, December 21, 2017, listed on the Nigerian Stock Exchange (NSE), the $300 million Diaspora Bond issued in June and the $3 billion Eurobonds issued in November at the International Capital Market (ICM).
Also, the listing by introduction of 800million ordinary shares of Global Spectrum Energy Services Plc at a listing price of N5 per share is a culmination of several months of hard work by all parties to the transaction.
On Friday, May 5, 2017 the Exchange automated its Rights trading and settlement which allows shareholders to sell subscription rights both efficiently and at fair prices.
In line with efforts aimed at promoting transparency, disclosure, visibility and liquidity of listed Real Estate Investment Trusts (REITs) and Closed End Funds in the Nigerian capital market, the NSE changed the framework regarding the trading of REITs; and Closed End Funds listed on The Exchange. The changes were implemented over three quarters of 2017.
Nigeria’s aspiration to become a green economy inched closer in 2017 as the Federal Government met investors and Capital Markets Operators in Lagos for the first ever Green Bonds Conference. Nigeria’s first green bond issuance will be the first ever Sovereign issuance in an emerging market.
The Sovereign Green Bonds project is part of a strategic process by the Federal Government to add to the nation’s funding options to catalyse the rebound of our economy and offer the vast majority of Nigerians, a new alternative.
The Green bonds issuance will be the first stage in enabling Nigerian tap into the growing global market for green bonds, which as of end of 2016 comprised of $576billion of unlabelled climate-aligned bonds and $118billion of labelled green bonds according to Climate Bonds Initiative in London.
“A sovereign green bond represents a new stage in development of Nigerian capital markets and opens the way for further corporate issuance and international investment. The NSE is playing a key role to help develop this enormous opportunity for Nigeria and fulfil one of our key objectives as a member of the UN Sustainable Stock Exchange Initiative,” says Oscar Onyema, CEO the Nigerian Stock Exchange.
The Exchange exclusively listed the Series 1 of the Federal Government of Nigeria (FGN) Savings Bond, maturing March 2019. The Savings Bond, the first of its kind in Nigeria, was opened to investing public by way of offer for subscription over a 5 day offer period starting from Monday, March 13, 2017 to March 17, 2017 and N2, 067, 961, 000 was raised from the retail market at 13.01 percent coupon.
There was also the listing of the $1 billion Federal Government (FGN) Eurobond on the floor of the Exchange. The bond was issued under Nigeria’s newly established Global Medium Term Note programme.
The benefits of the bond which is listed on the NSE Retail Bond Market amongst others is to help enhance the savings culture among Nigerians while providing all citizens irrespective of income level, an opportunity to contribute to National Development; as well as the comparatively favourable returns available in the Capital market. The FGN Savings Bond is safe and backed by the full faith and credit of the Federal Government of Nigeria, with quarterly coupon payments to bondholders.
The Nigerian Stock Exchange members approved the demutualization scheme of the Exchange. This decision was reached at the Extra-Ordinary General Meeting (EGM) of its members which held on Thursday, March 30, 2017, at the Stock Exchange House, Lagos. Demutualisation is the process through which any member owned organisation becomes a shareholder-owned company. Basically, it refers to the conversion of a non-profit, mutually owned company to a for-profit entity limited by shares. Demutualisation segregates ownership and management from the trading rights of the members of an exchange.
Specifically, members of the Exchange authorised the National Council and Management of the Exchange to proceed with the process leading up to the demutualisation of the Exchange subject to applicable laws and regulations and obtaining the approvals of members and the relevant regulatory authorities. They also ratified the engagement of financial advisers, legal advisers, tax advisers and any other adviser that may be required for the demutualisation of the Exchange. Also in 2017, the NSE elected Abimbola Ogunbanjo as the president of National Council of the Exchange.
The approval of the NSE demutualisation plan marks the achievement of an important milestone towards completion of the exercise. The demutualization of the Exchange is meant to bring the Nigerian capital market on a par with other international jurisdictions, result in enhanced governance, transparency and visibility whilst attracting strategic partners, investors and good quality issuers.
Also in 2017, the NSE and London Stock Exchange Group (LSEG) renewed their strategic capital markets partnership agreement which extends the original 2 year partnership agreement between the NSE and LSEG, allowing the two Exchanges to build on the progress achieved to date.
The collaboration with London Stock Exchange is deliberate and strategic and it is geared at encouraging seamless cross-border access between Nigerian and London markets to ultimately develop larger capital markets that enable capital formation for businesses and governments; create deeper liquidity pools and greater competitiveness for investors; as well as enhance capacity and promote diversity of investment products to meet the needs of a wide range of investors and issuers.
First signed in November 2014, the capital markets partnership agreement seeks to strengthen cooperation and promote mutual development between the two exchanges. The agreement supports companies seeking dual listings in London and Lagos. Since entering into this partnership, the two exchanges have held three hugely successful NSE/LSEG Dual Listings Conferences aimed at providing global visibility and access to deep capital pools for companies and issuers from both markets.
On Thursday, June 1, 2017, the Exchange launched X-Academy, a knowledge-platform designed to provide education services to individuals for better understanding of various aspects of the capital markets.
X-Academy would help in strengthening financial literacy and enhance investment in the capital market. It will offer a wide range of courses geared towards bridging the knowledge gap of dealing members, issuers, investors and the general public about products and services of the capital market.
The establishment of X-Academy is consistent with NSE tradition of pioneering far-reaching innovations within the Nigerian capital market. The product would feed directly into the National Financial Inclusion Strategy (NFIS) which was launched by the Federal Government of Nigeria in 2012 to reduce the number of adult Nigerians who were financially excluded, from 46.3percent in 2010 to 20 per cent by 2020.
X-Academy would provide individuals and businesses with a robust and effective array of training solutions that would ensure participants were abreast with trends in the rapidly evolving financial markets.
Nasdaq and the Nigerian Stock Exchange (NSE) officially launched a new market surveillance platform powered by SMARTS, Nasdaq’s flagship surveillance solution. Nasdaq SMARTS Surveillance solutions have been the industry benchmark for real-time, cross-market, cross-asset surveillance for over 22 years. Used by over 3,500 compliance professionals around the world, SMARTS currently powers surveillance at 47 marketplaces, 17 regulators and over 140 market participants across 65 countries.
The technology amongst other things enables NSE to proactively monitor market manipulation (including spoofing and layering), detect and deter manipulative tendencies, gather intelligence, carry out traders’ monitoring and analysis, conduct multi-asset and cross-market surveillance, and execute risk-based supervision of flagged participants.
As Nigeria enters the growth phase of the development of its market, including the introduction of new asset classes such as derivatives, there will be the imperative of processing significant volumes of market information in real-time to detect anomalies. The SMARTS technology, which Nasdaq and NSE successfully deployed allows both parties team to proactively analyze patterns and trends to make sense of the vast amounts of data for investigative purposes and protection of investors, while strengthening the integrity of our market.
Through SMARTS, NSE is leveraging the latest in surveillance technology and demonstrating its commitment to fostering a strong marketplace. SMARTS performs universal surveillance of all asset classes and provides a strong platform for NSE to develop new products such as derivatives.
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