Minister tasks stakeholders on capital market revival
Already, the Securities and Exchange Commission (SEC) has issued queries to 35 stockbroking firms, over alleged infractions.
Babalola, in his keynote address at the Nigerian Economic Summit Group (NESG) policy dialogue on the Nigerian capital market in Lagos, said prior to the market decline two years ago, there were indications of avoidable challenges within the system.
He pointed out that the problems in the capital market were not due to lack of dialogue but lack of courage.
“We need a financial system that is built on soundness not a bubble market here and there.
“We need a capital market that will encourage entrepreneurship. How can you have this monumental collapse in the market? The market is becoming a yoyo. How can you be the best in the world today, the next moment, the worst in the world. Something is definitely wrong somewhere” said Babalola.
He advised relevant authorities in the capital market to further get the private sector involved in its operation, pointing out that there has never been a time that the system need the private sector more than now.
Director General SEC, Arunma Oteh confirmed that the commission has dispatched letters of queries to 35 stock broking firms for allegedly indulging in unethical practices.
According to Oteh, the affected stockbrokers have been given specific period to respond to the various allegations which led to the query.
Oteh, explained that if the responses from the stockbroker are not satisfactory to the “deficiency letter” from SEC, their licences would be revoked.
Oteh said she was shocked at the alleged insider dealing coupled with alleged fraudulent activities in the market.
According to her, the commission would take necessary action within the ambit of the law to protect investors interest..
Oteh added that within the next few weeks, the commission would make public findings of a joint task force comprising of Central Bank of Nigeria (CBN) and SEC, while restating that the commission would strive to restore investors’ confidence to the market.
“I’m shocked at the alleged insider dealings. As we move forward, this kind of thing will never happen again,” Oteh added.
Oteh, who spoke on sundry issues said while penalties for violating securities law should be commensurate with the offences, they must be stiff enough to discourage violations.
“When sactions are a ‘slap on the wrist’, they become incentive to violate. Our enforcement regime would also be that which attracts the confidence of participants in its processes and outcome.
“You will agree with me that the work of the criminal law enforcement agencies is extremely important in the investigation and prosecution of criminal cases. Successful prosecution of such cases will undoubtedly serve as deterrence and reduce criminal practices in the market.
“The commission is therefore strengthening relationship with these institutions. We believe that closer collaboration will improve understanding and capacity of law enforcement agencies to expediously handle capital market and strengthen the commission’s zero tolerance policy on infractions.
“An important component of the zero tolerant policy is the naming and shaming of market violators. This is perhaps one of the most effective means of ensuring market discipline as it rubs on the reputation of the violator which can be very costly indeed” said Oteh.
Other experts at the event titled “Strategy for building a world class capital market” spoke of the need for strong enforcement and regulations.
The experts included Chairman, Arian Capital Limited, Mr Dotun Sulaiman; Managing Director, Afrinvest Limited, Mr Ike Chioke; Managing Partner, Banwo & Ighodalo and Former Managing Director , Nomura Securities International, New York , Dr Cathy C. Patterson.
She said the market needs to migrate from a certificate based system to full dematerialization in order to improve market recovery efficiency and eliminate the problems associated with the current system.
“We also hope to leverage on the technology to improve the examination of the market
She said the greatest asset of any capital market and indeed financial market is its investors, adding that it is investors, whether retail or institutional who provide the savings, which are needed for productive investment.