Nigeria’s new securities exchanges association set to achieve global competitiveness

Five exchanges in Nigeria have come together to form the Association of Securities Exchange of Nigeria (ASEN) in Lagos. The exchanges — AFEX Commodities Exchange (AFEX), FMDQ OTC Securities Exchange (FMDQ), NASD OTC Securities Exchange (NASD), Nigeria Commodity Exchange (NCX) and The Nigerian Stock Exchange (NSE) — which are the first members of the association, hope to use the new platform to accelerate the development of domestic securities exchanges and support the Nigerian capital market to achieve greater global competitiveness.

The Chairman of ASEN Board of Trustees and Chief Executive Officer of the NSE, Oscar Onyema noted at the official launch of ASEN, that securities exchanges around the world are establishing mechanisms for cooperation, which positions their businesses, as well as their markets to be more attractive to investors. This, he said they do in response to the operating environment and competitive landscape

“Nigerian securities exchanges must therefore embrace a broader collaborative effort to unlock new opportunities and efficiencies in view of increasing global competition. The establishment of this association is a bold step towards the actualisation of that vision of becoming globally competitive trading venues,” Onyema said.

The Acting Director- General of Nigeria’s Securities and Exchange Commission (SEC) Mary Uduk, while speaking at the event called for more collaboration among the exchanges, while maintaining a healthy competition that ensures the Nigerian securities market remain attractive to investors.

“The securities exchanges are encouraged to work more closely especially in the area of share services to provide efficiency and cost effectiveness across their operations,” Uduk added.

Securities exchanges around the world had often form associations to enable collaboration, improve efficiency and ensure adequate representation and protection of their interests. In Africa, several exchanges belong to the  African Securities Exchanges Association (ASEA). The association, which was incorporated in Kenya in 1993 has the objective of providing a formal framework for the mutual co-operation of stock exchanges on the continent. ASEA enables the exchange of information and assistance in the development of member exchanges.

Most exchanges world over, are also members or affiliates of the World Federation of Exchanges (WFE). Chief among WFE’s objectives is advocating on behalf of the global exchange sector and working with global regulators to establish standards for the proper functioning of publicly regulated securities markets. Nigeria’s NSE is a member of ASEA and WFE. Another Nigerian exchange FMDQ is an affiliate of WFE.

Commenting on the launch of the new association of securities exchanges in Nigeria, Ikpenmosa Uhumuavbi, an International Finance & Investment Securities expert said it was great to see the birth of the association, which he noted will help members share best practices and promote capacity building. “This will likely reduce the negative effect of information asymmetry,” he added.

However, he advised the Exchanges on the need to maintain their distinctive characteristics to provide that variety for investors. “Information asymmetry has some advantages too. Competition is also good for business,” Uhumuavbi noted.

ASEN will be governed by a Board of Trustees, with NSE’s Onyema as chairman and members as Bola Ajomale, CEO, NASD Plc, Ayodeji Balogun of AFEX, Zaheera Baba-Ari (representing NCX) and Bola Onadele. Koko (representing FMDQ).