Nigerian Regulatory Bodies and Exchange Collaborate to Strengthen Securities Lending Facility

The Nigerian securities market is set to witness a boost in investor participation and securities lending transactions, as the Securities and Exchange Commission (SEC), National Pension Commission (PenCom), and Nigerian Exchange Limited (NGX) have reaffirmed their commitment to advancing the securities lending facility.

This affirmation was made during a virtual workshop organized by NGX in collaboration with Central Securities Clearing System Plc (CSCS), Cardinalstone Partners, Stanbic IBTC Nominees, and the Pension Fund Operators Association of Nigeria (PenOp). The workshop, themed “Business Facilitation Act 2023 as a catalyst for deepening Securities lending in Nigeria,” brought together various stakeholders, including retail and institutional investors, Pension Funds Administrators, Fund Managers, ETF Issuers, regulators, and policymakers.

In his opening remarks, Jude Chiemeka, the Divisional Head of Capital Markets at NGX, highlighted the significant legislative progress made with the enactment of the Business Facilitation (Miscellaneous Provisions) Act, 2022, which led to amendments in Section 89 (2) of the Pension Reform Act. These amendments now permit pension assets to qualify for securities lending, subject to guidelines from PenCom.

Chiemeka stressed the collaborative effort between NGX and PenCom to deepen the securities lending space for the benefit of Retirement Savings Account (RSA) holders and the pension industry. He emphasized NGX’s commitment to partnering with stakeholders to enhance securities lending and contribute to the growth and development of the Nigerian and African capital markets.

Representing SEC, Abdulkadri Abass, the Director of Registration, Exchanges, Market Infrastructure, and Innovation, expressed SEC’s dedication to maintaining a just, organized, and efficient market that safeguards investor interests. He highlighted the significance of the provision within the Business Facilitation Act that allows Pension Fund Administrators (PFAs) to engage in securities lending, which is expected to deepen the market and enhance liquidity.

Ibrahim Kangiwa, Head of Investment Supervision at PENCOM, echoed the commitment to enhancing securities lending, noting that the enactment of the Business Facilitation Act empowered PENCOM to develop guidelines for securities lending in collaboration with NGX and other stakeholders. Kangiwa disclosed that PENCOM is actively working on these regulations and processes and aims to unveil guidelines for PFAs by the year’s end.

Onome Komolafe, Divisional Head of Business Services and Client Experience at CSCS, provided insights into CSCS’s role in the securities lending market. She discussed the pre-settlement and pre-trade aspects of these activities and highlighted CSCS’s involvement in the detachment process for securities lending.