In a bid to eliminate some bottlenecks in the nation’s capital market, the Securities and Exchange Commission, SEC, has commenced moves to ensure that the process of issuing new shares is completed within three to four weeks and at less cost to the issuers. The Director General of SEC, Mr. Mounir Gwarzo, revealed this to Financial Vanguard at the last Capital Market Committee, CMC, meeting, in Lagos. He said that in order to reduce the cost burden associated with issuing new shares, the SEC, the Nigerian Stock Exchange, NSE, and the issuing houses have agreed to cut their transaction cost using a formula that would be developed by the CMC later in the year.
He expressed optimism that with the various measures, progress would be made in attracting more issuers to the market, while time to market would be reduced. He said: “We also looked at the issue of transaction cost, which some issuers are complaining that is discouraging them from accessing the capital market. The issuing house, the NSE, the SEC and the receiving agents agreed based on the formula developed by the market that there must be hair cut. “Even though SEC has very limited resources, but because of our commitment to the market, we agreed to shed weigh. NSE has also agreed to shed weight and issuing houses have agreed to shed weight. So collectively, we agreed on a formula and it will be implemented very soon. We believe that with this, the processes will be made easier”.
He said that in order to stop the practice where issuers file separate application and document to the NSE and SEC, a portal would be developed where the issuers will upload the documents for assessment by the SEC and NSE. “We will try and harmonise some of the documents that are concurrently filed with SEC and NSE. We will also look at documents that are more related to SEC and those that are more related to NSE jobs and we harmonise them so that it will be more easier for issuers to file those documents,” Gwarzo asserted He warned that henceforth, incomplete application forms would be thrown out by the SEC, saying: “We informed operators that greater job is actually on them because if the application forms are incomplete, there is no way SEC will finish its review and revert back to them within five working days.
They have to do their own part. Any application filed with us that is incomplete will not be attended to again. So, issuing houses and operators must sit down and do their jobs very well so that within a maximum of three to four weeks, once application is filed, it is approved.” On direct cash settlement, Mr. Seyi Owotura, Managing Director, USL Registrar, explained that the important aspect of the initiative is that it is going to promote significant transparency and engender speed in capital market transactions. He added that the era of moving from one registrar and stockbroking firm to the other trying to validate dividend is gone. Gwarzo said that within the next six months, all registered operators would be required to have sponsored individual as required by SEC rules such that any operator that has less than the required number will not eligible to operate in the market.
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