The Chartered Institute of Stockbrokers urged pension fund managers to participate more actively in the stock market.
This was disclosed in a statement during a recent courtesy visit by its leadership to the Central Bank of Nigeria Governor, Mr Olayemi Cardoso, according to The Punch.
In addition, the Institute requested assistance from the Central Bank of Nigeria to enhance the role played by its members in financial intermediation and to increase capital market transactions in Nigeria.
The President and Chairman of the CIS Council, Mr Oluwole Adeosun, said, “Pension funds are globally the foundational base that drives sustainable liquidity for the local equity market. While the Pension Act permits the pension fund administrators to invest up to 25 per cent of their pension assets in the equity arm of the capital market, we have noticed that about 10 per cent of the funds are invested in the equity market, despite the enhanced regulation, investor protection, and high return in the market.
“Given the critical role of pension fund investment in galvanising liquidity in the domestic equity market, pension fund administrators should be investing a substantially higher proportion of their funds in equities. We, therefore, seek the support of the CBN to engage with PENCOM in this regard.”
The CIS President has also reaffirmed the ability and willingness of stockbrokers to support a bank recapitalisation plan in the next 24 months.
“The Nigerian capital market can support the recapitalisation exercise. It was amply demonstrated during the indigenisation exercise as far back as 1972 and successive banking sector recapitalisation programmes over the years up till the last major banking recapitalisation exercise between 2004 and 2006.
“With technology and new subscription channels like mobile apps, the current exercise should record even greater success and bring in more and younger Nigerians into the investment community,” he stated.
Meanwhile, Adeosun commenting on on margin lending of banking stocks said “We request that securities of publicly listed banks should be allowed as marginable securities as long as these securities pass the ‘criteria for determining marginable securities’ test.”
According to the Securities and Exchange Commission, margin lending is borrowing from a financial institution to buy stocks using existing investments as security.
