Nigeria: NGX mulls non-depository receipts to enhance capital market activities

Nigerian Exchange Limited (NGX) has announced plans to introduce Non-Depository Receipts (NDR) to further deepen the activities in the Nigerian capital market.

This disclosure was made by the NGX’s Divisional Head of Capital Markets, Mr Jude Chiemeka, during a fireside chat themed “Investor sentiment on Nigeria: success and challenges”, at the 2023 Nigeria Risk Summit held in Lagos.

The Benefits of Non-Depository Receipts 

According to him, the NDR would grant the investing public access to financial instruments listed on an offshore exchange and provide investors with access to alternate investment schemes.

• “With this initiative, asset managers will sponsor this instrument offshore, convert the receipts and sell off in our local market,” he explained. “In the end, we are not only enabling exposure to foreign exchange, but we are also preparing a marketplace with a broader spectrum of participants.”

Technology Board Listing Rules

While listing other initiatives embarked on by the Exchange, Chiemeka noted that NGX had in 2022 gotten approval from the Securities and Exchange Commission (SEC) on its Technology Board Listing Rules.

• “Our aim with this is to encourage investments in indigenous technologically inclined companies within Nigeria and across Africa by providing greater visibility to these companies.”
• “In recognizing the importance of investor education to a healthy market, NGX had partnered with the IFC and Islamic Development Bank to train capital market participants on the impact of sustainable and Islamic finance respectively,” he added.

Impending collaborations

Speaking further on partnership opportunities within the capital market, he explained that the Exchange had partnered with other stock exchanges like the London Stock Exchange (LSE) to offer dual listings to corporates and increase the size of the market where investors can invest in a broader-based market.

He said that NGX had also signed a Memorandum of Understanding with the Luxembourg Stock Exchange (LuSE) to aid the cross-issuance and listing of green bonds.

Additionally, he maintained that NGX is working with the Ghana Stock Exchange (GSE) to improve on secondary listings that will develop private market utilization of technology.

What you should know

The Securities and Exchange Commission (SEC) recently approved the rules for listing on NGX Technology Board.

The NGX Technology Board is a specialised platform for technology-based companies to list and raise capital on the Exchange.

Through the board, NGX aims to encourage investments in indigenous technologically inclined companies and others across Africa, provide greater visibility to these companies and ultimately deepen the Nigerian capital market. Securities listed on NGX Technology Board will be accessible to qualified institutional investors, retail investors, and high-net-worth investors.