With the aim of enhancing investor participation and securities lending transactions in the Nigerian capital market, the Securities and Exchange Commission (SEC), National Pension Commission (PENCOM) and Nigerian Exchange Limited (NGX) have reaffirmed their commitment to further developing the securities lending landscape.
This commitment was reiterated during the NGX Securities Lending workshop held on Wednesday, August 9, 2023, in collaboration with Central Securities Clearing System Plc (CSCS), Cardinalstone Partners, Stanbic IBTC Nominees, and the Pension Fund Operators Association of Nigeria (PenOps). The virtual workshop with the theme “Business Facilitation Act 2023 as a catalyst for deepening Securities lending in Nigeria,” brought together diverse stakeholders, including retail and institutional investors, Pension Funds Administrators, Fund Managers, ETF Issuers, regulators, and policymakers.
The divisional head, Capital Markets, NGX, Jude Chiemeka, highlighted in his opening remarks that one of the significant achievements during the previous administration of President Muhammadu Buhari was the assent of the Business Facilitation (Miscellaneous Provisions) Act, 2022 on February 14, 2023. This legislative milestone led to crucial amendments being made to Section 89 (2) of the Pension Reform Act, allowing pension assets to qualify for securities lending, subject to guidelines issued by PENCOM.
Chiemeka emphasised that these amendments create new possibilities within Nigeria’s securities landscape, particularly for institutional investors like Pension Fund Administrators (PFAs). “In light of this, NGX and PENCOM will forge a close collaboration to deepen this space for the benefit of Retirement Savings Account (RSA) holders and the pension industry at large.” Chiemeka also underlined NGX’s ongoing commitment to partnering with all relevant stakeholders in the market to enhance securities lending. “This collaborative effort aims to foster the growth and development of the capital market in Nigeria and across the African continent.”
Delivering his goodwill remarks, the director of registration, exchanges, market infrastructure, and innovation, SEC, Abdulkadri Abass, represented by senior manager, Franca Ebube, emphasised that SEC remains resolute in upholding a market that is just, organised, and efficient, prioritising the safeguarding of investor interests. He highlighted that the recent provision within the Business Facilitation Act, which permits Pension Fund Administrators (PFAs) to partake in securities lending, will undoubtedly deepen the market and increase liquidity.
Corroborating Abass, Ibrahim Kangiwa, the Head of Investment Supervision at PENCOM, affirmed that the enactment of the Business Facilitation Act in 2023 empowered PENCOM to advance guidelines aimed at facilitating securities lending, working with NGX and other stakeholders. Kangiwa disclosed that the commission is actively working on developing these regulations and processes, with the intention of unveiling guidelines for PFAs by the end of the year.
Onome Komolafe, the Divisional Head of Business Services and Client Experience at CSCS, provided insights into CSCS’s efforts in the securities lending market. She elaborated on the pre-settlement and pre-trade aspects of these activities, while also highlighting CSCS’s involvement in the detachment process for securities lending.
Panel discussants including the CEO of PenOps, Oguche Agudah; CEO of Stanbic Nominees, Babatunde Majiyagbe; CEO of CardinalStone Securities, Peter Omoregie; and the President of the Fund Managers Association of Nigeria, Aigbovbioise Aig-Imoukhuede, attributed the limited participation in securities lending to lack of awareness and inadequate securities supply. They stressed the need for increased collaboration among stakeholders to boost growth and activity in the securities lending space.
