Nigerian Stock Exchange to expand range to lure investors, says CEO Oscar Onyema

Oscar Onyema, CEO, Nigerian Stock Exchange. Credit:

The Nigerian Stock Exchange, Africa’s second-largest, is looking to attract investors spooked by a weakened currency and oil price by offering more products ahead of a possible listing.

“We would like to give exposure to asset classes that we are not necessarily trading,” said CEO Oscar Onyema, a former Wall Street executive who returned home like many Nigerians to tap opportunities in Africa’s biggest economy.

Onyema said the Nigerian Stock Exchange, one of the main entry points for foreign funds into Africa, plans to launch a clearing house to allow futures and options trading this year.

The exchange will also change its ownership structure this year, in a move that will bring in more investors and possibly lead to a share offer at a later stage, Onyema said.

The exchange plans to add options to its portfolio of products to boost liquidity and help investors manage risk.

To reach that goal, Africa’s second-largest bourse after the Johannesburg Stock Exchange was launching a clearing house that will be independent and will have banks, the central bank and other stock exchanges as members, Onyema said.

Onyema also said the bourse was on track to change its ownership structure this year from a mutual firm of 500 broker members to add shareholders, with the aim of improving governance and possibly open up new funding sources, including the possibility of a share offer.

“This is still early days,” Onyema said.

In October, the bourse said it had appointed South African bank FirstRand and local investment firm Chapel Hill Denham to advise it on the transformation.

Nigeria‘s share index, which has the second-biggest weighting after Kuwait on the MSCI Frontier Markets Index, has fallen 16 percent in the first five weeks of this year as foreign funds, unnerved by a weaker naira and the drop in crude prices, sold stocks.

The recent sell-off prompted the exchange to put in place a circuit breaker last month to check volatility. It also plans to increase monitoring against market manipulation.

Onyema said the bourse was turning more to domestic investors to boost trading volumes on the exchange, since domestic investors are not exposed to currency risk. Domestic investors control 75 percent of the market capitalization of companies listed on the Nigerian Stock Exchange.

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