Determined to deepen liquidity in the nation’s bourse, the Securities and Exchange Commission (SEC) is engaging the National Pension Commission (PENCOM) and the Asset Management Corporation of Nigeria (AMCON) on securities lending.
Ms Mary Uduk, SEC acting Director-General, disclosed this at the third quarter post-Capital Market Committee (CMC) meeting news conference on Friday in Lagos.
Uduk said that the commission was engaging PENCOM on modalities which would permit Pension Fund Administrators (PFAs) to participate in Securities Lending.
Securities lending is the act of loaning a stock, derivative or other security to an investor or firm.
Securities lending requires the borrower to put up collateral, whether cash, security or a letter of credit.
“We have been engaging not only PENCOM but all local institutional investors that have substantial holding of equities and the essence of having this securities lending is to actually deepen our market.
“All of us are contributing to our own pension accounts and these PFAs are buying equities.
“What they do is to buy and hold, they don’t sell and they hold it, so the essence of securities lending is now to give room for them to make money and so that the money will now add up to their own contribution fund.
“We have a framework which has been approved and we are encouraging the market to go into self-lending by meeting these institutional investors.
“Pension is the highest institutional investor in our market, they will now lend out these securities and when they lend out, it will be credited back to the pension fund account.
“At the end of the contract, they will get their securities back.
“Instead of holding the securities, they are making money out of it; that is the essence.
“So, we are engaging PENCOM to see it as an investment opportunity, and they have bought into the idea.
“We are discussing to see how they can be able to come up with their guideline based on their provision of the Act to allow securities lending to take place.
“In addition, we are engaging another institutional investor, AMCON.
“It is a holistic approach to have a win win situation in our market,” Uduk said.
On unclaimed dividends, Uduk attributed the development to legacy issues, noting that the Commission was working toward its elimination.
“Issues of unclaimed dividends are legacy issues; right now, you will not get unclaimed dividends from new issues.
“We are engaging various stakeholders to be able to get the information we require.
“Items like BVN has been added to help in identity management which the capital market is also taking advantage of.
