NASD to Launch Investor Protection Fund, Strengthen Trading in H2 2021

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By Ashemiriogwa Emmanuel

Following a very impressive first-half performance, the NASD Over-the-Counter (OTC) Securities Exchange is set for an active second half of 2021.

In this half of the year, there are plans to commence the NASD Investor Protection Fund (IPF), among other implementations to further strengthen the unlisted securities bourse.

The Managing Director and Chief Executive Officer (CEO) of NASD, Mr Bola Ajomale, while speaking at a webinar held last Friday, which was monitored by Business Post, stated that the IPF scheme is to compensate investors with genuine claims of pecuniary loss resulting from insolvency, bankruptcy or negligence of a capital market operator.

In addition, he said there are also plans to implement the Financial Information Exchange (FIX) Protocol which will be used to disseminate price and trade information among investment banks and broker-dealers.

He added that there will be the implementation of a tight-coupling to Central Securities Depository (CSD) in the second half of the year which provides securities accounts, central safekeeping services and asset services in helping to ensure the integrity of securities issues.

“We believe these plans will come into fruition in the second half of 2021. We are trying to get market investors into different asset classes to allow investors to participate in the market through buying into funds and several asset classes.

“With ETFs, you are allowed to buy into asset classes that allow you to hedge against risks. We are going to work according to guidelines issued by the SEC on the process of tokenization. When we are set, we will run a web shot of it and be sure,” he stated.

According to him, there are moves to launch a mobile application by the end of the third quarter.

“We are working on making it standardised; engage all operators or participating institutions in the market and then run a test to get feedback,” he said.

Speaking on strategies for the NASD to attract more foreign investors, the NASD helmsman said, “The OTC market we operate is one where we see foreign investors come in for the long term stocks and take a short position in a short period and sometimes, they come in a position (long or short) in a particular stock and exit the stock or market leaving Nigerians to buy the awkward end of that stock. So, the OTC market is one for short term positions on stocks.”

He also said the bourse plans to regulate crowdfunded projects to open its crowdfunding portal, VentureRamp, for donor-based crowdfunding which facilitates capital raise for enterprises seeking to fund projects of varying sizes, expansion, new product development, and so on.

Mr Ajomale noted that the exchange will open its dealer category for applicants who want to register with NASD as dealers on the OTC Market while onboarding was set to commence soon.

NASD OTC Securities Q2 Market Performance Breakdown

Meanwhile, NASD recorded a positive market performance at the close of the second quarter of 2021 compared to the previous quarter as its market capitalisation increased by 22.9 per cent to N652.5 billion from the N531 billion recorded in the first quarter of the year.

Similarly, NASD Security Index (NSI) also rose by 1.1 per cent to 754.9 index points from the 747.01 recorded at the end of the first three months of 2021.

Trading activity in the period under review showed that the total value on the market jumped to N7.8 billion from the N1.4 billion, a 457 per cent increase, while the volume also skyrocketed by 936.6 per cent from 41 million units to 425 million units.

This happened as three new companies joined the market in the period under review; the Nigerian Exchange Group Plc, 11 Plc and Capital Bancorp Plc.

This equally led to a rise in the number of deals recorded at the bourse for the quarter under review as investors executed a total of 2,292 deals, 512.8 per cent higher than the 374 recorded in Q1 2021.

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