Issuing Houses proffer ways to revive capital market
Apparently irked by the unprecedented lull witnessed in the nation’s stock market, the Association of Issuing Houses of Nigeria (AIHN) has urged capital market regulators to make fees and commissions charged on transactions more attractive..
Besides, they seek unified licence that would empower market operators to intermediate across segments of the financial market.
The capital market has been on a lingering bearish trend that has caused investors’ wealth to depreciate significantly.
The stakeholders argued that fees and commissions on certain transactions should not be regulated and therefore urged regulators to create a moderate transaction cost.
They maintained that this would create incentive and make the market more robust to improve liquidity and growth.
Specifically, the Managing Director of Afrinvest Nigeria Limited, Ike Chioke submitted that market forces should determine fees on transactions and not regulatory imposed.
“The regulator has not articulated properly the distinction between different kinds of securities and fee threshold. Instead of focusing on pegging the fee of an adviser to a certain number, it should really look at the dynamics and how to deepen and enhance the market.
“If I know that a company is willing to pay me five percent to be listed on the Nigerian Stock Exchange (NSE) because it is a lot of hard work to do, then I should be allowed to charge those fees.
“Once those shares are listed, they become permanent in the market to the benefit and growth of the Nigerian capital market.
“So, the issue of fees needs not be ‘one size fits all’. As the market gets more efficient, what you find is that the fees will drop because there will be more competition and more participants offering similar services.
“Fees should be set by market forces, although we do feel that any charges that are regulatory imposed should be as efficient as possible, to the barest minimum which is what obtains abroad,” Chioke argued.
The First Vice President of the Association, Sonnie Ayere, explained that fees and commissions charged by the professionals should not be regulated.
Ayere, who is also the Managing Director, Dunn Loren Merrifield stressed the need to introduce a unified licence for operators in order to boost their operations.
He noted that implementing a unified licence regime may result to consolidation in the system, but, however, maintained that it would ultimately produce stronger operators and improve market liquidity.
According to him, if operators were empowered to do all-inclusive transactions, the market would be more robust to improve liquidity.
“You cannot have a market whereby you are operating on one side. To really be a full financial intermediary, you have to intermediate across segments of the market.
“An institution like our own, for instance, has no participation whatsoever in the money market.
“Those things are part of what we, as an association, are trying to look at to significantly improve our market the way countries like Malaysia and others have done,” Ayere added.
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