Operators in the Nigerian capital market have called on the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC)

to grant them single dealing license to access Discount Window.

This according to them will facilitate a more robust and deeper financial market, being currently regulated by the Securities and Exchange Commission and cut out of the Primary Auction Market for Treasury Bills.

The Group Managing Director of Dunn Loren Merrifield, Mr. Sonnie Ayere, made this call while presenting a paper entitled “Deepening the

Nation’s Capital Market for Economic Growth” at the annual workshop of

Financial Correspondents Association of Nigeria (CAMCAN) in Lagos.

He said the access will boost liquidity of the operators in the market, stating that the reform will provide a much stronger platform for market based financial intermediation to thrive, ensure that they

are well capitalised and regulated.

Ayere, who is the President of Association of Issuing Houses of

Nigeria explained that issuance of a combined Capital Market Dealing

License will reduce the numbers of licenses being issued.

He said: “We are proposing that the CBN allow capital market

institutions with the requisite capital (as agreed by CBN) access to Primary Auctions on behalf of themselves and their customers.

“Discount Window access can then be given to such operators to be able

to discount for liquidity purposes all instruments normally acceptable

to the Central Bank of Nigeria.”

He stressed that the CBN should not focus only on commercial banks,

saying that the combined capital base of issuing houses, stockbroking

firms is not up to the capital base of a smallest bank in the country.

Also speaking on the same topic the Vice President and Divisional

Head, Corporate Planning, Kaodi Ugoji, noted that the country has been

affected by illiquidity, lack of regulatory framework and high focus on risk-free securities.

She added that because of illiquidity in the market companies are

borrowing short term funds to finance long term projects, saying that

there is need to introduce measures to enlarge the domestic institutional investors base, particularly through pension sector reforms.

According to her, the importance of a strong and viable domestic

capital market as an alternative source of finance in emerging economies has been affirmed by the success it has enjoyed in countries such as Brazil, Malaysia, Russia, India and China.

“With government economic reforms running at full throttle, prospects

are high for the sustained development of the Nigerian Capital Market

as a viable tool for driving Nigeria’s economic growth.

“Countries that have successfully leveraged the capital market for

economic growth have a number of similar characteristics, some of

which include: large domestic institutional investor base, developed

infrastructure, macroeconomic stability, and more. Nigeria must therefore implement some of these initiatives in order to further deepen its capital markets for economic growth,” she said.