SEC Laments Negative Impact Of TSA On Capital Market Operations

The Director-General, Securities and Exchange Commission, Mr Mounir Gwarzo, on Tuesday, said the inclusion of the commission in the implementation of the Treasury Single Account is affecting its capital market operation.

Gwarzo said this when the House of Representatives Committee on capital market visited the commission in Abuja.

He said apart from the TSA, the downturn in the capital market is a huge challenge to the commission as the income currently being generated cannot cover 50 per cent of its operating.

For instance, he said in the 2015 budget, the commission had projected to generate an income of N6.9bn adding that this could not be realized as it could only generate N4.9bn.

He said, “What we generate from the market cannot cover more than 50 per cent of our cost. So more often we have to dip into that fund (funds saved by past SEC administrations).

“But now with the TSA and other things, that flexibility is being cut off because some of the interest income that we derive from those investment, we don’t enjoy them any longer.”

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“SEC is now running a very tight budget, given that the market has gone down and given that there are aspirations to move the market up we have to set aside some amount of money.”

Gwarzo said the commission is putting in place strategies to attract more retail investors into the Nigerian capital market in its determination to deepen and develop the market.

He said unlike countries such as South Africa and Malaysia, Nigeria has a low rate of retail investors penetration.

He said “We have pursued a lot of initiatives in the last year and we are pursuing more this year.

“We are taking it from a perspective that this market has never witnessed and the perspective is to address some of the lingering complaints of the investor.

“We believe that the retail investors are the owners of this market so our strategy should focus on them.

“As a country we have only less than two per cent participation of retail investors in our market. Malaysia has nine per cent,South Africa 19 per cent,United State and United Kingdom 13 per cent.”

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The SEC DG disclosed that the commission was addressing the issue of dematerialization, where share certificates have not been fully dematerialized in the market.

The Chairman of the Committee, Dr. Tajudeen Yusuf said the committee would assist the commission in increasing the number of quoted companies on the stock exchange.

He said, “We are all aware that the market is not doing well presently and SEC generates to own revenue from the market.

“So whatever that happens in the market has a direct correlation with the revenue of SEC. We have seen that there is need to dig deeper and look for ways to ensure that as a regulator SEC is up and kicking to be able to perform their responsibilities.

“We will assist to ensure that companies that ought to be listed are listed; we need to explore avenues to getting them into the capital market.”

He called on the commission to increase its efforts at sensitizing investors as this would also assist in increasing the level of retail investments in the stock market.