The Capital Market Committee (CMC) has recommended that the ongoing dematerialization of shares being traded on the Nigerian Stock Exchange (NSE) should be extended to unlisted companies to boost the market’s capitalization.
The Acting Director General of the Securities and Exchange Commission (SEC), Ms. Mary Uduk, gave this hint while briefing journalists on the decisions taken at the end of the committee’s first quarter 2019 meeting held in Lagos.
Uduk said that the CMC hinged its position for the extension of the exercise to shares of unlisted public companies on the potential benefits, including enhanced liquidity and market dynamism, ease of market processes, and ease of decision making in securities investment, amongst others.
She explained: “Dematerialization is the process of converting physical shares into electronic format. The Investor surrenders his physical shares and in turn gets electronic shares in his demat account.
“The advantages of dematerialization are many: it enables the investor to trade at any time without necessarily passing through the bottlenecks of verifying the share certificates any longer, because the shares are now domiciled with CSCS, he can give a mandate to his broker at any time and the broker accesses the Exchange that same day and trade for him”, the SEC boss added.
The investment expert explained further that the market advocated for the Commission to take strong actions against Company secretaries who aid the trade of shares of unlisted public company outside a SEC recognized platform as required by the law.
She solicited the support of the media and the collaboration of the entire market for the regulatory body as it continues to strive to build a globally competitive capital market.
The CMC, which is an industry-wide committee comprising members of the commission, representatives of capital market operators and trade groups and other stakeholders, was established to serve as a platform for exchange of ideas among market stakeholders as well as for feedback to SEC on how to continuously improve the market activities and regulations.
