Shareholders On e-DMMS Platform Hit 2.8m in Q3’19, Says SEC
UMORU ABDULKADIR
The Securities and Exchange Commission (SEC) has said that the number of shareholders enrolled on the e-DMMs platform has increased to 2,820,065 at the end of the third quarter period ended September 30, 2019.
This was disclosed by the Acting Director-General of SEC, Mary Uduk, while briefing newsmen at the end of the last meeting of the Capital Market Committee (CMC) recently held in Lagos.
She said there are ongoing efforts by the Commission to integrate the Direct Cash Settlement and the e-DMMS mandate forms, as well as the engagement with the Central Bank Nigeria (CBN) on the inclusion of e-DMMS charges among allowable bank charges.
Uduk said, going forward, Registrars are to discontinue the practice of requesting for confirmation of bank signature during the E-DMMS process, as Capital Market Operators (CMOs) is to display awareness campaign banners of e-DMMS at their offices and Venue of Annual General Meetings (AGM), adding that CMOs are to work with the Commission to share awareness information on their social media platforms.
“We feel that once you complete the e-dividend mandate form which will be taken to the bank to verify that you are the account holder, you don’t need another banker’s confirmation. That is just a duplication of duties. You can even go to the banks, fill the e-dividend registration form, the bank will verify the account number and signature and they will send it to the registrar. So we don’t think any other confirmation is needed since the information is coming from the bank,” she said.
On Transfer of complete Investor data among operators, she stated that SEC was going to review the request from the Association of Stockbroking Houses of Nigeria (ASHON) for extension of time for compliance on the transfer of complete investor data among operators such as Brokers, Registrars and CSCS. Upon completion, the position of the Commission will be communicated to the relevant parties.
Responding to a question on Multiple Subscription regularization, she said the Multiple Subscription Committee had already presented the status of its ongoing engagement with the CBN and Committee of Heads of Banking Operation to display multiple accounts regularization banners in the banking halls all over the country. She added that the Committee also reported that CMOs have commenced the filing of report on regularized accounts with the Commission, on a quarterly basis. Given the relevance of this exercise and the need to create more awareness.
On when the regularization process was expected to end, she said; “There is no definite timeline for now, we have left it open. In due course we will have a meeting to review the success.”
“In those days of plenty in the capital market, there were a lot of abuse where people used multiple names to buy shares. Many of them do not even remember the names they used at that time and therefore asking them to come forward to regularise their shares is difficult. Some of them probably do not know where the documents are. Some of them, maybe the very big ones are probably afraid of prosecution and that is why we said we have given amnesty.”
“The issue of timeline for this kind of thing, we believe should be stepped down for now just to be able to give people enough time to look for their documents and then come and regularise their shares in order to reduce unclaimed dividends in the market,” she explained.
While speaking further, she disclosed that the Non-interest Finance Committee had presented the importance of granting the Pension Fund Administrators (PFAs) the permission to invest a given percentage of a willing contributor’s Retirement Savings Accounts in Non-Interest capital market products.
She stated that the Commission was engaging the National Pension Commission (PENCOM) on modalities that would permit Pension Fund Administrators (PFAs) to participate in Securities Lending.
Explaining further, she said, “We have a committee which has been engaging all institutional investors that have a substantial holding of equities. The essence of having this securities lending is to actually deepen our market. All of us are contributing to our pensions’ accounts and these are being invested inequities. What they do is to buy and hold, they don’t sell. So the essence of securities lending is to give room for them to make money so that the profit can then be added to what contributors would get. We have a framework which has been approved and we are encouraging them to go into securities lending. They are being encouraged to lend out these securities, they make money out of it. We are encouraging the market players to go into securities lending by meeting these institutional investors, Pencom is the largest local institutional player in our market. They will lend out these securities and make money out of it, at the end of the contract, they get their money back. Instead of holding on to their securities, they are making money out of it.”
“We are engaging Pencom and discussing to see how they can come up with their guidelines for it to happen. Another institutional investor we are engaging is AMCON, all these are being done to deepen our market.”
Uduk said, in order to ensure liquidity in the market as well as attract retail investors to the market, the Commission has put various initiatives in place all geared towards attracting retail investors to the market. She said, “We are interacting with them in a lot of ways like the social media, educational materials, excursions to the Commission, enlightenment campaigns among others. We are also interacting with them through the new curriculum that we are coming up with for Capital Market Studies in secondary schools.”
”Of recent, we interacted with the army, even for us it was an eye opener. They came out in their numbers and we intend to do more. We have a department in the Commission where students from all over the country come to the Commission for interactions.”
“We try to engage all sectors of the country; we believe that we need to develop this market. That is why we have both short term and long term plans. What we are doing with the universities are research based conferences, issues that will be very key to the market are brought to the fore. We just completed one with the University of Lagos and other universities have indicated their interest in such programmes too. People are aware that there are safety nets in the capital market when you invest in funds because your risks are diversified. For all the northern states, we look at ethical funds and we are doing to do roundtable discussions there in collaboration with the state governors.”
“In the coming months, we will see a high growth in the capital market with all these sensitizations,” she assured.
On managing the current worrisome Issues of unclaimed dividends, she said, they were legacy issues, as they have been happening from time immemorial but stated that the Commission was doing its best to ensure that are no longer issues of unclaimed dividends from new issues, saying that part of the problem of unclaimed dividend was connected to identity management.
She said, “We are doing all we can to educate the public on and engaging the various stakeholders to be able to get a lot of the information that we require. Since then, items like BVN has been added to help in identity management. The capital market is also taking advantage of it. The CSCS and the registrars are working together to ensure that more information from the legacy shareholders are being collected to be able to update their information and get them to be able to claim their dividends.”
“Of recent, there has been a lot of engagements with shareholders on this issue. The registrars don’t have direct interface with shareholders, they deal directly with stockbrokers. But there is a committee comprising of SEC, the registrars, the stockbrokers, the issuing houses, the CSCS and NSE working on that in addition to the e-dividend management. The committee has come up with a resolution which was adopted at the last CMC meeting. Part of the resolutions is that stock brokers will update information in respect of their client.”
“They are legacy issues, remember that before 2008, we had a lot of Nigerians who bought shares in the capital market and at that time we did not have BVN numbers. Even some of them did not provide their account numbers. What was agreed was that we would update information of such shareholders. That information will be transmitted to the CSCS who will update their own information and send them to the registrars. Which means we will not address the legacy issues by the time brokers update that information. What was also agreed was that there will be no transaction in respect of any account that information is not updated. We also talked on the issue of compliance and enforcement which has to do with conduct of capital market operators. It was agreed that there will be zero tolerance and the brokers will be given a time frame. We hope that by the time that information are updated, the issue of unclaimed dividends will be resolved.”
She said, as part of efforts to reduce the issue of unclaimed dividends, the Commission has approved the rule in respect of electronic offering and we believe that by the time we commence that, it will address that. She added, “Before you can complete the application, the system will validate your account number, the system will not accept incomplete application. We believe that in addition to the e-dividend mandate, these other initiatives that the Commission is doing with other stakeholders will address the issue of unclaimed dividends.”
She also explained that the SEC had put in place the necessary framework properly for demutualization of any exchange at the moment, saying that it was already reviewing the application by the NSE and after the review exercise, the Commission will get back to them.
Speaking further, Uduk described the latest development as a milestone in the annals of the Nigerian capital market, adding that the process has to be thorough. She said, “We just received a feedback from them upon our letter to them. It is on course and the SEC will do what it needs to do to ensure that the process is very transparent.”
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