presentation on challenges of capital market regulation in nigeria

1. The challenges of capital market regulation in Nigeria
BY
Nevo Samuel Prosper
Group: BM-26b
Subject: SECURITY MARKET

2. Contents
Bank Consolidation
The global financial crisis
Nigeria capital market crisis
Provision of financial information to the market
Consequences of financial crisis
Capital market and regulation
How does regulation impact on capital market.
Conclusion

3. Bank consolidation
The year 2007 was a very busy year for the Nigeria capital market. It
was the year; the bank of Nigeria consolidation policy. It brought with it
a host of challenges, for the Banks, the regulators, the existing market
infrastructure, the investors and other participants. It also brought good
fortune across the board, but was short-lived by the global financial
crisis in 2008.

4. NIGERIA CAPITAL MARKET CRISIS
Apart from the global financial crisis, Nigeria had its own peculiar internal financial
crisis in the capital market. There was large scale of usage of margin loan granted by
Banks to stockbrokers to buy shares which later had serious negative consequences
for the banks who gave the loan. There were causes of fraudulent and unethical
practices by the executive and the board of some banks; non purchase of shares for
clients by some stockbrokers; misappropriation of client fund by receiving agent; cases
of multiples application, nonreturn of surplus money by the issuers of securities
and non-release of issue of proceed by receiving bankers.
SEC and CBN promptly commence investigation of the activities of the affected
bank and capital market operators which was stimulating the capital market negatively.

5. THE GLOBAL FINANCIAL CRISIS
The global financial crisis brought financial loss indirectly to the
Nigerian investors as well. The crisis also brought regulatory and
corporate governance issues to the front barrier. It exposed the weakness
of the regulatory and supervisory framework of countries.
When it started, it was believed that Nigeria was not going to be
affected as the Nigerian financial system was not dealing with the type
of financial instruments that were not performing in the global scene.
We seem to forget that we were in global market without boundaries and
that what happens in one country could affect another country directly
or indirectly. Nigeria of course, was affected indirectly. It was the ripple
effect that caught up with the Nigeria capital market Foreign portfolio
and hedge fund managers, who had invested heavily in the offer for
subscription of banks, had to safeguard their clients investments by
exiting the Nigeria capital market.

6. Provision of financial information to the market
Compliance with section 60 and 65 of investment and security Act(ISA) 2007 on corporate
responsibilities of public companies posed some challenges. To give affect, the commission designed a
reporting format for public companies to render periodic and annual audited financial statement to the
investing public.
This was aimed at ensuring that investment decision were based on timely and reliable financial
information. A time period within which these statement should be released to the commission was also
stated. Companies generally failed to comply with this regulatory requirements. Enforcing this rule was
necessary at this time because of some of the identified causes of the global financial crisis. Information
off course is key to capital market activities.
All efforts to make public companies comply failed. Series of reminders were sent and names of
companies whose periodic reports were due for filling and release to the market were published in the
National daily Newspapers as a reminder. As a last resort, the commission applied the sanction rules,
companies who defaulted were panelized. It was after the punitive action that public companies started
to comply.
All of the presented challenges to the regulator as the relevant regulated entities failed to comply
regulatory requirement as when due.

7. Consequences of financial crisis
 The global and domestic financial crisis revealed some regulatory challanged
whiched needed to be addressed.
 The crisis brought regulatory and corporate governance issues to the front burner
as it exposed the weaknesses of the regulatory and the supervisory frame work of
the countries.
 It showed the lack colleboration among regulators prevented a comprehensive and
a consolidated view of activities in their respective domain.
 It revealed that regulators were not proactive enough in identifying and addressing
possible threat to the capital market.
 It became evident that financial institutions which were poorly govern by posed a
risk to theselves and to others which could lead to collapse of financial market.

8. Capital market and regulation
Capital Market according to (Weber's New world finance an investment dictionary),
as market in which debt and equity are raised and then traded in secondary market.
It can also be define as the segment of the financial system for the sourcing of
medium to long-term fund. The muturity or the tenor of instruments and traded. By
this definition is the major distinquishing factor between the money and capital
market. While the maximum tenor or the maturity date of instrument traded in the
money market is usually less than one year that of capital market could range from
one year to perpetuality.
Regulation.
Regulation on the other hand is define as the rule of order having the force of law,
prescribed by superior or competent authority relating to the action of those under
the authourity's control.

9.  A summary of the definitions gives a clue that the challenges in the capital market
bears with it an opporturnities for development.
The regulator can therefore come up with the enforceable rules, so that the benefit
within the opportunities can realised.

10. How does regulation impact on capital market.
Regulation of capital market covers the participants, institutions, and the instruments
that are traded in the market. Regulation enables capital market to function more
effectively, transperent and impartial.
Capital market is of great interest to the global community that is why the international
organization securities (IOSCO), the umbrella body of securities commissions from
time to time comes up with the best practices in securities regulation which are
premised on three core objectives, namelt:
 Protecting investors
 Ensuring that market are fair, effecien, and transperent.
 Reducing systemic risk.
Members of organization are emplored to pratically implement the principles under
their respective frame work.

11. conclusion
Challenges of capital market regulation can be approached from different perspectives
based of corse from the view point of the person dealing the subject. On my part I
have approached the topic from the perspective of an insider but with some personal
views added. Capital market need a collective and positive effort to meet the intended
purpose..
Behavioral and brand wagon effect has serious negative impact on markets. NT:
Markets fall and rise.
THANKS FOR YOUR ATTENTION!!