A call for renaissance to Nigerian stockbrokers

“Modern technology has become a total phenomenon for civilization, the defining force of a new social order in which efficiency is no longer an option but a necessity imposed on all human activity.” Jacques Ellul

RENAISSANCE DE NOTES rebirth and regeneration. In married life, the 30th wedding anniversary calls for celebration of wisdom, purity and love. In the life of an organisation, it creates an opportunity to review the credits and debits over the period and make prognosis towards moving to the next level.

Stockbrokers, under the aegis of the Chartered Institute of Stockbrokers (CIS), have in the last two months commenced the institute’s 30th anniversary with a clear message of celebrating three decades of impeccable professionalism. The founding fathers of the institute deserve a thumbs up for the great initiative as their labour of the past is what every stockbrokers is enjoying today.

The first phase of the celebrations commenced on Friday, November 4, with a thanksgiving service in the mosque in Lagos and the same was replicated in a church on Sunday, November 6. This was followed by a street walk through Marina in Lagos. The institute’s president, Oluwole Adeosun, symbolically closed trading in some securities exchanges as part of the celebration.

The second phase started with the investiture of two past presidents of The Nigerian Stock Exchange (now NGX), namely, Aliko Mohammed and Goodie Ibru, as Honorary Fellows due to their key roles in the market’s development. There was a definitive public lecture on, “The Past, Present and Future” of the institute, by Prince Abimbola Olashore. Special awards were presented to those whose roles cannot be ignored in the formative years of the institute.

Subsequently, the institute held the investiture of the former military Head of State, Ibrahim Bagbangida, a retired general, in Minna, Niger State, and that of the legal luminary, Christopher Ogunbanjo, in Lagos. More eminent Nigerians, including Aliko Dangote and Aigboje Aig-Imoukhuede, are already scheduled for the prestigious award in due course. A lot has changed in the operating environment of stockbrokers in the last 30 years. However, there are many rivers to cross.

“Despite the huge challenges and hurdles to cross, I am very proud to state that CIS’ members were instrumental to the accomplishment of several major milestones in the Nigerian economy,” says Adeosun. There is no doubt that stockbrokers played key roles in the implementation of banking sector recapitalisation exercise of 2005-2007, despite some critics’ notion that the policy of N25 billion minimum capital base for banks would not succeed. Today, many banks operate above N100 billion capital base.

The ‘Gentlemen of the City’ have always played intermediating roles in the purchase and sale of the Federal Government’s Sukuk Bond, floated to bridge funding gap for infrastructural projects and financing of budget deficits. Stockbrokers have traded heavily in the equity market, though other asset classes such as fixed income securities, derivatives and emerging digital assets are also on the front line.

CIS has revolutionized the certification processes by creating a Stand-Alone Programme, which enables individuals to determine their areas of specialisation in line with global standards. Today, a candidate of the institute can write the examination online from many parts of the world through remote access; though it is not heartwarming that after 30 years, CIS can only boast of just above 3000 members in a country of over 200 million people. Worst still, the future drivers of the Nigerian economy, the millennials do not appear to be interested in this important certification. Many of them could not understand why the certification is not recognised as a basis for employment in the public service, banks, and admission into universities. The CISI Bill that will expand the institute’s scope and reinforce its rebranding for global competitiveness is currently undergoing scrutiny at the National Assembly.

The institute parades multidimensional professionals with robust industry experience as you must have belonged to another profession before you undergo the processes of the institute’s certification. This explains why stockbrokers have comparative advantage in advising the government on how to deepen the capital market and leverage it to grow the economy. They have advised the government by sending a communique to the Presidency and appropriate government parastatals after every conference over the years. But there has never been any feedback. The same ‘no response’ has been received from past communiques of Association of Securities Dealing Houses of Nigeria (ASHON), an umbrella for institutional members of stockbrokers. There is no doubt that stockbrokers are needed in the strategic areas of economic decision making. Why is it that there is no stockbroker at the Central Bank of Nigeria’s Monetary Policy Committee (MPC), to constantly remind the members about the inverse relationship between equity prices and changes in interest rate whenever the apex bank intends to review the Monetary Policy Rate (MPR)? Are there certified stockbrokers at the commanding heights of the Ministry of Finance? What about the Ministry of Industry, Trade and Investment? The time has come to recognise these investment doctors and tap into their talents to transform our financial markets. Governor Godwin Obaseki of Edo State, is a stockbroker and there are some stockbrokers at the National Assembly and at commissioner level in many states. They are all assets.

On the list of the prayers during the institute’s conference held in Benin in September, were the need for the Federal Government to abolish the controversial Capital Gains Tax (CGT), which increases transaction cost, legislate that all commodities exports should go through a commodities exchange for quality control, to make our commodities highly competitive in the international market and deploy appropriate policies as risk aversion measures for digital asset classes. I hope these lofty suggestions will not go the usual way of no response.

The economy is the underlying asset that determines the state of the capital market. The federal government should play a pivotal role in creating an enabling environment through the provision of infrastructure, addressing macroeconomic vagaries, enactment of market-friendly rules, increased utilization of the capital market to finance infrastructural deficits and revisit margin loans for stockbrokers to drive liquidity into the market. At the minimum, these shall create the much-needed enabling environment for stockbrokers.

The 30th anniversary of the institute calls for sober reflection on the future of securities market. It is settled in strategic business management that business growth is contingent on continuing to generate a pipeline of new ideas. Stockbrokers do not need a tarot card to know that digitization shall continue to alter the cosmic balance of their business. You don’t need to be a stockbroker to execute transactions any longer. This comes with a great challenge to stockbrokers to train their clients on transaction processes to mitigate abuse of transaction.

Stockbrokers must constantly come with creativity and innovation to remain in business. They must invest more in technology. They must deepen their research base and learn new things to cope with the demand of savvy investors. The leadership of the institute and ASHON must wear their thinking caps to chart a roadmap for their members to flow with the tide. They must be on top of their game.

The emergence of NASD OTC Exchange, FMDQ, AFEX and Lagos Commodities and Futures Exchange (LCFE) with new asset classes has broken the age-long monopoly of NGX and presents more opportunities for stockbrokers to make money. These also come with a new challenge for stockbrokers to create new products for millennials to capture the huge niche market. The Securities and Exchange Commission (SEC) should be commended for the launch of its Revised Capital Market Master Plan, which is set to transform the entire capital market operations. But there are insinuations that inputs of ASHON and CIS were not sought during the period of revision of the Master Plan. Absence of inputs from these major stakeholders is a lethal attack on the successful implementation of the roadmap, but there is still room for dialogue. Stockbrokers operate in a highly regulated market. They must keep to the rules of the game which are largely meant to protect investors. Much as many stockbrokers have distinguished themselves as financial engineers in the last 30 years, some had paid dearly for malpractices by way of life jail or revocation of trading licences. Some stockbrokers passed on due to the shock of the 2008 meltdown.

However, by all known metrics, the 30th anniversary of the institute speaks into a glorious tomorrow when stockbrokers shall regain the pride of their profession; A day the newly qualified ones shall be offered employment with jumbo packages immediately after certification; when securities exchanges shall be under pressure to meet huge requests for Quotation Committee’s meeting where applications for new issues are approved; a day when millennials shall be on the queue to write the institute’s professional examination; and a day the government would accord stockbrokers the much needed recognition to serve in various capacities.

This is a trying period in the global financial market. The world economy has taken a nosedive, so, this is not peculiar to Nigeria. The famous Wall Street is also under pressure as its over 4000 stockbrokers have reduced sharply. All these must pass away.

Beyond the euphoria of the 30th anniversary celebration, the institute’s leadership should go back to the drawing board to chart a 10year road map on how its members shall be relevant in the changing dynamics of the global financial market. The institute should defend its brand purpose. Happy anniversary to a major brand. It was normal as we sang, “For we are jolly good fellows”, recently, when Adeosun closed the trading on NGX on Monday, November 7, at the re-opening of the trading floor after the long closure due to covid-19 pandemic.Thanks to uninterrupted remote trading.

As Nigerian stockbrokers continue to relish in the 30th anniversary celebrations, everyone should be guided by the immutable words of Will Rogers that, “Even if you’re on the right track, you’ll get run over if you just sit there.” Happy 30th anniversary to all stockbrokers in Nigeria. business a.m. commits to publishing a diversity of views, opinions and comments. It, therefore, welcomes your reaction to this and any of our articles via email: comment@businessamlive.com