The minimum operating standard initiated by the Nigerian Stock Exchange (NSE) would boost regulations and build strong operational structure that would help mitigate risk in the stock market, the local bourse has said.
Among these standards are infrastructural/informational requirements for operators in the market and personnel/board management requirements.
Head, Broker Dealer Regulation, NSE, Olufemi Shobanjo, said the policy was developed in the year 2011 by the Capital Market Committee to forestall some of the challenges that led to the 2008 recession in the nation’s capital market.
The Exchange, according to him, has taken the position that it is imperative for broker dealers to build strong corporate and operational structures for their operations in order to mitigate risk and strengthen the market.
He noted that the decision was in line with efforts to augment long-term protection for investors and stakeholders in the capital market
The standards, according to Shobanjo, would address the five broad areas of manpower and equipment; organisational structure and governance; effective processes; global competitiveness and technology.
He said: “Healthy and well established firms are in a better position to manage and absorb any shocks that may be experienced in the capital market. This approach is in line with the regulatory tools employed globally to manage risks in the activities of capital market operators.
The minimum standards also aim to nurture confidence in the capital market and enhance investor protection,” he said.
Shobanjo explained that the Exchange had undergone tremendous transformation in the last few years and intended to extend these “forward-moving traits to the market operators.”
He said: “We intend to ensure that the broker dealers, brokers and dealers have very robust controls, strong governance framework and sustainable operations that will enable them to compete on a global scale for the benefit of the investors and the Nigerian capital market.
“The capital market is very dynamic with a diverse mix of local and foreign investors who can invest with the confidence that the dealing members operate pursuant to clearly defined standards that are comparable to those to which broker dealers in other climes operate.”
We simply cannot afford to be inferior to anyone in terms of size, skill, technology or organisational governance of our market participants.”
Shobanjo pointed out that the move would give more credence to activities of stockbrokers and would also boost the increased listing drive of the Exchange by encouraging more firms to list. Besides, he said the investors will be given an extra degree of protection because the operators they will be dealing with will be very robust, strong institutions that are properly run with good controls and globally acceptable processes.
He reiterated the NSE’s commitment towards enhancing professionalism of operators in the capital market, adding that it would organise a series of training activities for stockbrokers and market operators as part of its continuous professional development programme.
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