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As a popular maxim goes, once is happenstance, twice is coincidence and thrice is a pattern.
There seems to be an evolving but scandalous pattern in our stock market whereby some unscrupulous stockbrokers sell their clients shares without due authorization but for their own selfish gain.
Recently, the Economic and Financial Crime Commission (EFCC), published a notice declaring the Managing Director of a stock broking firm wanted over allegations of stealing N120 million shares belonging to one of his clients.
Stockbrokers by the nature of their profession, are gentlemen of integrity, highly respected and trusted world wide. But it has become very disturbing that a few of them seem determined to exploit the latent function of The Depository; a situation which if left unchecked is capable of eroding investor confidence in our market.
We cannot afford such a situation because the stock market is a very strategic institution in the creation and mobilization of wealth for economic development.
The regulatory authorities will be shirking their responsibility should they fail to take appropriate measures to arrest the evolving pattern.
This is why The Nigerian Stock Exchange (NSE), and the Central Securities Clearing System (CSCS), deserve commendation for introducing the Trade Alert. It is a situation of, when the going gets tough, the tough gets going, as they say.
The Trade Alert was introduced as one in a mix of measures to checkmate the unwholesome practice of these few stockbrokers. But more important is the fact that it was introduced in good faith, for the protection of investors.
It is therefore a surprise that the Chartered Institute of Stockbrokers (CIS), a member of the capital market family has politicized the introduction of the product. This is, to say the least, prodigal.
The CIS is also myopic because it has chosen to focus only on the pecuniary connotation of Trade Alert, in the guise of investors’ protection, notwithstanding the fact that the NSE has favourably reviewed the conditionality's for subscription; to the effect that 65 per cent of the investors will benefit from Trade Alert free of charge.
But while the CIS has chosen to play the role of a spoiler in NSE’s drive to maintain the sanctity of the stock market, it has totally discountenanced the rot that is building up in its fold. If it didn’t, it would have appreciated the spirit of the regulatory bodies in making Trade Alert compulsory for subscription and then proceed to work in tandem.
Rather than join hands to protect the integrity of the market, the CIS is blindfolded by trivialities and inconsequential matters and has instead, resorted to the bashing of the NSE, and making wild and spurious allegations and unguarded attacks on the office and person of the Director-General of the NSE, Ndi Okereke-Onyiuke, OON.
Among the deluge of such allegations are; that the NSE/CSCS postured as if Trade Alert was their product, that the NSE is spending money to advertise a product that belongs to a private company and that NSE/SEC/CSCS stand to cream off a minimum of N2 billion monthly from investors through the product.
But on the contrary, it was clear from the on set, that the Trade Alert is the product of Adonai Net, the company which has also been responsible for all the advertisement costs.
Moreover, it is important to note that investors are not paying for the software, but for the airtime being utilized to send SMS. Besides, 65 per cent of the investors as earlier stated, will not pay for them to take benefit of the product.
Thus, the allegation that the regulatory bodies will scoop N2 billion monthly does not hold and it is very important that this is appreciated and fully digested because it appears the CIS is particularly agitated about the monetary factor.
Again, out of sheer ignorance, the CIS alleged that there will be room for manipulation and insider dealing, because the platform of the Trade Alert is hosted in South Africa, while further alleging that the nation’s security will be jeopardized for the same reason.
But expert opinions debunk those claims. The platform it was understood, is encrypted and so cannot be decoded by any other source, more so, when the trading engine is in Nigeria. It is also risk free for the nation’s security, it was further learnt. Moreover, no Nigerian company has its platform hosted in the country due to infrastructural limitations.
The other allegations by the CIS which have been critically examined by this writer are; that the NSE had not rendered account on the Investors Protection
Fund, nor had the Fund been audited for a long while, adding that the NSE understates its revenue annually.
The NSE has been known to be an epitome of integrity and transparency. It is either the CIS allegations are conjectural, or that the institute is all out to deliberately malign the integrity of the NSE out of sheer animosity or frustration.
The 2004 unaudited Account of the Investors Protection Fund is very much available though it was learnt that the Fund has now been suspended due to variation in its operation and provision of the Investment and Securities Act.
As an investor, market watcher and analyst, this writer often obtained copies of the Report and Accounts of the NSE for critical analysis, just as he does with the reports of companies wherein he has investments, for the purpose of keeping abreast with the affairs of both the regulated and the regulator. Considering the status of the NSE as a non-profit making organization, it is therefore uncalled for, for the CIS to allege that the former understates its revenue.
The other issues raised by the Institute are irrelevant, inconsequential and a digression from the kernel of the matter.
For instance, to allege that licenses of the NSE were only issued on payment of unofficial sum ranging from N10 million to N20 million is conjectural and irrelevant, knowing that application for new licenses have always been handled and treated by the Council of the NSE which comprise men and women of integrity.
It is also amusing for the CIS to further allege that the NSE/CSCS have compelled their workforce to subscribe to Trade Alert in order to give the wrong impression of wide acceptability of the product just as it is preposterous for the Institute to be perturbed about the existing cordial relationship between the NSE and SEC. The relationship is healthy and advantageous to the development of the market, contrary to the abrasive relationship that existed between the two institutions in the past.
For the CIS to pry into the administrative machineries of the two institutions in order to make uncomplimentary insinuations is unethical and lousy, just as it is scandalous and illogical to allege that the apex regulatory body in the capital market (SEC) takes directives from the NSE.
The SEC has always been known as an upright institution that has effectively discharged its responsibility as the watchdog of the market. That it is now working in tandem with the NSE should not be misinterpreted as capitulation or servitude.
In as much as the NSE and SEC may not be omniscient, they are both highly organized, rationally comprehensive and progressive institutions, respectively.
The Director-General of the NSE, Ndi Okereke-Onyiuke is a woman of substance, ideas and integrity. She has been working tirelessly for the promotion of the capital market particularly, and the economy generally since her return from the United States of America in the early 1980s. She therefore deserves commendation and eulogy.
Presently, she is also the Chairman of Transnational Corporation of Nigeria Plc, Nigeria’s mega firm that is positioned to change the face of business in Nigeria and beyond, with the crème-de-la-crème of Corporate Nigeria as Board members. It takes a woman of integrity to be there.
Okereke-Onyiuke has paid her dues and is highly recognized and respected in Africa, Europe, Asia and the United States of America.
In as much as the CIS has every right to establish its relevance in the capital market it should endeavour to walk in truth, seek and establish ways of improving the market rather than make spurious allegations and swimming in irrationalities and inanities. It should also focus on the discontent among its membership, which has elicited the formation of another body to advance the course of stock broking in Nigeria. A house dividend cannot stand.
Andrew Anana is a Lagos based Financial Consultant.
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