Chief Executive Officer, Nigerian Stock Exchange (NSE), Oscar Onyema has disclosed that the demutualisation process initiated by the exchange has reached the final stage of implementation, having gone through the first and second readings as well as a public hearing at the National Assembly.
Onyema disclosed this at the 57th annual general meeting (AGM) of the NSE in Lagos.
Onyema further disclosed that the council and management were working with their advisors to fine-tune certain areas of the demutualisation project, ThisDay reveals. Noting that the NSE is waiting for the Demutualisation Bill to be signed into law to fast-track the process.
In his words: “while waiting for the bill to be signed into law, we are working on some outstanding aspects and providing clarity on the process through regular engagement with stakeholders.
“we are very positive that the demutualisation of the nse will further catalyse the development of transparent and efficient capital market that is very critical to the country’s economic growth.” – Onyema
What demutualisation means
It simply means transforming the stock exchange from being a self-regulatory organization, with no shareholders, to a public company that is shareowner-based and profit-seeking. It allows the shares of an exchange to be quoted on its floor.
Technological advancement in the financial market has significantly increased competition among Stock Exchange globally. This competition has pressured many Exchange to adopt business models which have greatly improved their efficiencies and effectiveness. Also, it has seen stock markets demutualise, as well as build alliances or consolidate within and across borders, in order to enhance their attractiveness in the face of strong global competition.
- As a demutualised entity that is profit-seeking, the NSE will be in a better position to capitalise on new income opportunities, free from any limitations arising from conflicting member interests and existing laws and more importantly be able to better support the economic growth of the country.
- It will also provide the Exchange access to more capital-base that they are incapable of raising. Such capital-base will enable them to meet their needs and stay competitive without necessarily placing an additional financial burden on participants.
Recall that at the last Extra-Ordinary General Meeting (EGM) of its members held last year, members of the exchange authorised the National Council and Management of the Exchange to proceed with the process leading up to the demutualisation of the Exchange subject to applicable laws and regulations and obtaining the approvals of members and the relevant regulatory authorities.
The meeting also ratified the engagement of financial advisers, legal advisers, tax advisers and any other adviser that may be required for the demutualisation of the Exchange.
The NSE was established in 1960 and encompasses four subsidiaries which include Naira Properties Limited, Coral Properties Plc, NSE Consult Limited and NSE Nominees Limited.
The Exchange also has interests in NG Clearing Limited and Central Securities Clearing System (CSCS) Plc as a joint venture and associate company respectively.