SEC Engages PenCom, AMCON to Deepen Stock Market Liquidity

Stories by Goddy Egene

The Securities and Exchange Commission (SEC) is engaging the Pension Commission (PenCom) and the Asset Management Corporation of Nigeria (AMCON) on securities lending as part of efforts to deepen the capital market.

Securities lending is the act of loaning a stock, derivative or other security to an investor or firm.

Securities lending requires the borrower to put up collateral, whether cash, security or a letter of credit and PenCom and AMCON, who are major stakeholders in the market have been viewed as key to success of securities lending.

Speaking at the third quarter post Capital Market Committe (CMC) news conference in Lagos at the weekend, the acting DirectorGeneral, SEC, Ms. Mary Uduk said the commission was discussing with 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 to 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 securities lending to take place.”

She said in addition, SEC was engaging AMCOM, which is another institutional investor in the market. It is a holistic approach to have a win-win situation in our market,” Uduk said.

Speaking on unclaimed dividends, she said SEC was working hard to tackle the challenge. According to her, the unclaimed dividends, Uduk attributed the