Stakeholders Hail NSE on Demutualisation, List Benefits

Goddy Egene

Capital market stakeholders have hailed the final approval given by members of the Nigerian Stock Exchange (NSE) to demutualise the exchange to become a profit-making and limited liability company, saying it will benefit the market and the economy.

Members of the NSE, who are mostly stockbroking firms, had on Tuesday assented to proposal of the council to demutualise the exchange and appointed a board of directors that will steer the affairs of the organisation.
Some market stakeholders told THISDAY that the demutualisation of the exchange will improve its corporate governance structure, service delivery and lead to better market regulation, while creating more liquidity for the market operators.

A former Council Member of the NSE and Managing Director/CEO of APT Securities and Funds Limited, Mallam Garba Kurfi, said the demutualisation would lead to greater investor participation in the governance of the exchange and unlock capital for stockbrokers who may decide to trade their shares for liquidity.

“The demutualisation of the NSE would make the exchange to function better like its peers such as the Johannesburg Securities Exchange (JSE) and Nairobi Securities Exchanges that have already undergone the process. It will bring global best practice. In all, it is a good thing and all of us are going to be happy at the end of the day because it is going to unlock more capital for the market. For instance, if I place shares as collateral, I can trade and make money. We are pleased this is coming after so much delay,” he said.

Another stockbroker, Mr. Samuel Ayo Oguntayo, said as a profit-making company, the exchange would be restructured to become more agile and improve on its innovativeness and capitalise on new income opportunities in order to create value for shareholders.

“Apart from the fact that members who would be allotted their shares can trade these shares on over-the-counter (OTC) and make money, the benefits of the demutualisation will trickle down to ordinary Nigerians and every other participant in the market. Given the fact that the exchange will be restructured, there will be room for recruitment of new hands to man the new areas to be created.

“When it is a non-profit-making organisation, there was little motivation to make more money. But now that it is going to be a profit-making organisation, it has to make sure more money is made so as to end up with profit to share among the shareholders. The corporate governance principle governing other corporations will come into play and this means transparency. Besides, there will be more products and services in the market and this could be other streams of income for operators,” Oguntayo said.

An investor and shareholder activist, Mr. Boniface Okezie of Progressive Shareholders Association of Nigeria, said the demutualisation would bring benefits to all stakeholders in the market.

“It is going to be a healthy competition in the capital market because the platform will become a listed entity at some point. And so as everyone among its staff will put in their best to make sure people who invested reap their fruits of their investment because they will now compete with those other companies also listed in on the platform. Even foreign companies who want to do business here will take us serious going forward,” he stated.

Okezie noted that the exchange will also become more business-oriented and as a private-driven organisation, interference from the Securities and Exchange Commission (SEC) for instance, would reduce.

“That is the beauty of demutualisation of exchange all over the world. Take a look at the New York Exchange that is one of the best in the world today. Part of the money they will make from those trading on its floors, will be paid as dividend to some of those people and investors using the facilities. And that is a very good one and I believe the NSE will get to that level one day,” he added.

The Chief Executive Officer of the NSE, Mr. Oscar Onyema, had said the demutualisation was particularly important to the Nigerian capital market and the wider economy, noting that the exchange to serve the capital market ecosystem and economy more effectively than it has done in the past.