‘How regulators can boost market liquidity, growth’

 

CBN

By Helen Oji

Capital market experts have called for regulatory collaborations between the

Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) to create a friendly operating environment and boost stock market liquidity.

The experts argued that regulatory activities must be such that information and regulations can be disseminated across sectors to enable participants and operators to have the benefit of knowledge.

According to them, a situation where the Nigerian market operates in silos, especially in the areas of regulation, is a disincentive to growth objectives of both capital and financial markets

“Today, the so-called investment banking companies that operate across the sector, such as asset management, securities trading, issuing house and trustees, lack access to funding. In fact, under their securities trading business, which is a very important component of the capital market, that area had no access whatsoever to funding. So, imagine a trader or stock broker or market maker that cannot find where he can borrow money from to buy a security. How does he trade? How does he create liquidity for himself?

“That is why if the foreign investors leave our market, the market gets depressed, because there is no ‘buy power’ and that is one of the biggest problem in capital market and we are trying to see how CBN can step in and help in supporting capital market operators within risk parameters, without putting any sort of increasing financial instability”, he added.

He pointed out that the problems with the Nigerian market is that the regulators generally operate in silos, noting that if the jinx is broken such that information and regulation can flow across regulators and enable participants and operators to have the benefit of different regulators, investment banking sector would make a much-more desired operating environment for the market.