BY NKECHI NAECHE ESEZOBOR —In a bid to improve and deepen liquidity in the Nigerian Capital Market, the Nigeria Securities and Exchange Commission (SEC) at the weekend said is engaging the National Pension Commission (PenCom) and the Asset Management Corporation of Nigeria (AMCON) on securities lending.
Acting Director-General of SEC, Ms Mary Uduk, disclosed this at the third quarter post-Capital Market Committee (CMC) meeting media briefing held in Lagos.
She explained that the commission was engaging PenCom on modalities which would permit Pension Fund Administrators (PFAs) to participate in Securities Lending.
She said: “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 securitues 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.
