Operators Blame SEC, Other Regulators For Listing Constraint On NGX
Capital market operators have berated the Security and Exchange Commission (SEC) and other regulators for unfriendly business regulation seem to be frustrating investors from listing on the Nigerian capital market.
At the NGX CEO Roundtable, themed ‘Creating the enabling ecosystem for accessing capital from the Nigerian Capital Markets’, they said the major policy constraints in raising capital at the stock exchange include delay in transaction, obnoxious regulatory fees, over-burdening documentation and other cumbersome listing requirements.
For the operators, it has become expedient to allow companies to raise equities in the capital market as this will lead to jobs creation, macroeconomic stability and the general wellbeing of the market.
Speaking, the President of the Association of Issuing Houses of Nigeria (AIHN), Mr Ike Chioke, said time-to-market for transactions remains the biggest challenge faced in the capital market.
He said, “You hear from all our trade members where potential issuers will decide perhaps not to come to the market because the condition and timetable for approval will stretch far beyond the event they wanted to use that capital to do. They may then decide to go to the bank market and come back to us for refinance.”
The second main issue the regulator has to reconsider to attract more investors into the capital market is various regulatory fees, he said.
“This is a point we have made time and time to our regulators but they seem to mix up the cost of transaction in terms of secondary market trading cost with the cost of the primary issuance when you are actually bringing a fresh story into market. As a growing economy we need to actually break those two apart,” Chioke said.
According to the AIHN president, over the years the association have had to work with one of the regulators to compress the time for debt transactions in the market from about two month to 20 days, stating however that the recommendations from a committee set up to look into the matter, has yet to be approved or released.
Urging the regulators to remove fixed cap in bringing in initial public offer and equity transactions into the market, particularly the fixed cap on advisers, Chioke said, “It is to desegregate the cost of transaction and remove professional advisers from that cost.”
The Founding Partner of Banwo and Ighodalo, a corporate commercial law firm, Mr Asue Ighodalo, urged a broad review of the micro and macro levies.
According to him, it is now apparent that diligent training, effectiveness, efficiency, quality of staffing of operators and professionals have diminished greatly because of unattractive to capital market operator anymore.
Painting a real life transaction which happened two years ago, he said, “you pay N385 million to the Federal Competition and Consumer Protection Commission (FCCPC), N289 million to SEC processing fees, N339 million to Central Securities Clearing System (CSCS) and to the NGX N574 million, stamp duty and process at N206 million, we are paying nearly N2 billion. That is preposterous. We need to find a way to deal with all of these issues.”
President and Group CEO of Transnational Corporation, Owen Omogiafo, urged the regulators to streamline the process and .she the market more attractiveness. She said, “Are we able to create policies or address existing policies or reduce the barrier to entry because the entrepreneurs that are coming up, how many of them can actually access a bank loan?”
In answering to questions on what SEC is doing to review the contending issues, the Deputy Director and Head of Department, Securities and Investment Services at SEC, Mr Abdulkadir Abbas, said the commission has already started to look into some of the challenges raised.
SEC had in recent time even streamlined this issuance process to attract issuers into the market, as issuers who had filed documentations with SEC need not to do same with NGX, he said.
“We are actually reviewing the Investment and Trading Stamp Act to allow entities that were hitherto listed to list in our market. The second area we are looking at in terms of policy is encouraging digital innovation and offerings. We do realise that we cannot go along with this traditional way of listing,”
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