SEC to increase trading through securities lending



In a bid to increase trading on the floor, the Nigerian Security and Exchange Commission (SEC) is to allow securities lending.


The SEC has commenced discussions with institutional investors and other regulators towards trading activities such as short-selling, hedging and arbitrage, revealed the acting Director-General, SEC, Mary Uduk in an email. She said the measures are required for Nigeria’s capital markets to better attract inflows and be more liquid.


She said “We have a committee which has been engaging all institutional investors that have substantial holding of equities. The essence of having this securities lending is to actually deepen our market. All of us are contributing to our pension accounts and these are being invested in equities. What they do is to buy and hold, they don’t sell. So the essence of securities lending is to give room for them to make money so that the profit can then be added to what contributors would get.


“A vibrant securities-lending market will provide liquidity to such stocks and earn some returns for both the lender and the borrower.”


Last month, the exchange said it planned to introduce trading in financial derivatives to boost liquidity.