Committee to Study Possibility of Electronic IPO, Public Offers in Nigeria

By Modupe Gbadeyanka

Plans are being considered to come up with a system that will allow investors subscribe and make payment for initial public offerings (IPOs) and public offers online with such orders being matched and allotted electronically and directly to their accounts with the Central Securities and Clearing System (CSCS).

The full automation of primary issuance will involve automation of the process, approval, documentation, subscription and allotment of all issues, especially IPOs and public offers.

This is expected to enable primary market to operate within a designated transaction cycle, possibly within the T+3 four-day trading cycle being operated at the secondary market.

It is believed that IPOs automation and public offers will instil more transparency and efficiency into the Nigerian capital market, which will boost investors’ confidence and further position the market as a more competitive investment destination.

Also, the system is expected to bring about less time and cost on documentation and mailing, thus enabling parties to the issue to round off the transaction in a manner similar to the secondary market trading.

Already, a special-purpose committee on the full automation of the primary issuance process has been set up and should submit its report ahead of the next meeting of the Capital Market Committee (CMC).

The committee comprises CSCS, Securities and Exchange Commission (SEC), Nigeria Stock Exchange (NSE), Association of Issuing Houses of Nigeria (AIHN), Association of Stockbroking Houses of Nigeria (ASHON), Institute of Capital Market Registrars (ICMR), Capital Market Solicitor Association (CMSA), Fund Managers Association of Nigeria (FMAN), and Nigerian Interbank Settlement System (NIBSS).