The NSE’s campaign to join the WFE began four years ago but only came to fruition after the exchange successfully scaled series of assessments that culminated in a WFE inspection mission to NSE in September this year.
But despite the long wait and stringent measures the NSE has had to pass through to achieve the WFE full membership, its benefits will prove to be more than worth it.
Yvonne Emordi, the NSE’s team leader for the Exchange’s WFE membership project described the admission as “indeed a wonderful achievement” for
the Nigerian Exchange; here are five reasons she is totally correct.
The NSE Gains Credibility and Visibility:
The Nigerian Stock Exchange may have been rated among the world’s top ten performing markets last year, and among the largest in Africa by market capitalization of $115.68 billion and over 200 companies listed; but nothing beats the visibility that comes with being a full member of the WFE. This is perhaps the reason the first words accompanying Emordi’s elation at the confirmed WFE membership was stating that it sets the tone for the NSE’s upcoming Asia 5-day tour set to begin in December.
The WFE membership will be the perfect introduction for the NSE as it approaches Asian fund managers with frontier and emerging market investment strategies, starting from Singapore in December. It will also be a huge reference point as the NSE advertises itself as the ideal investment destination; it is only the fifth African member of the WFE, and the first in West, East and Central Africa.
The membership also strengthens the NSE’s quest for integration with global financial markets. Now as peers with world leading financial markets like the New York Stock Exchnge and several others, the NSE is well placed to better cooperation and partnerships that should see it enhance its credibility and evolution as a major player in the financial world.
NSE’s targeted $1 trillion market capitalization might have received its most significant boost.
Although there are over 200 stock exchanges in the world with over 630,000 companies listed in them, the World Federation of Exchanges has just 64 members (65 if you include the NSE) and about 45,000 companies listed in them; a statistics that depicts its cream of the crop status. All of the world’s 20 major stock exchanges are member of the WFE, and with the NSE joining such esteemed coterie, its reputation attains a higher pedestal.
Aside the bragging rights that comes from sharing the table with the world’s biggest stock exchanges, the NSE also benefits from the WFE’s unrivalled promotion of market standards and reliable statistics and inestimable advocacy for fairness, transparency and efficiency. The sort of networking availed by the WFE, one that bring together exchange experts from all around the world, also mean more improvement for the NSE.
The WFE ensures excellence in day-to-day operations of member Exchanges, meaning that the membership of the NSE recognizes it as peers in standards with the more illustrious Exchanges, a reputation only South Africa’s Johannesburg Stock Exchange currently enjoys in sub-Saharan Africa.
Global Best Practices
Reputation is as important as stocks to Stock Exchanges, and none is bigger than being reputed as adhering to Global Best Practices. Membership of the WFE both confirms and improves that reputation.
The route to WFE membership was stocked with series of certification assessments, thus its membership status reflects the exchange’s commitment to implementing the highest standards of international best practices. This is crucial to boost foreign investors’s confidence to list on the NSE, and serves as a guarantor for existing players.
Increase in Investment Flows
The end goal of joining the WFE is the investor attraction it brings for the NSE. Credibility, Visibility, Standardization, Best Practices etc., all add up to the attraction of the investment flows that the NSE greatly seeks.
NSE Chief Executive Oscar Onyema rightly described the WFE membership as an important reference for many international investors, while commenting on the news. The NSE’s ambition to be the foremost Stock Exchange in Africa means it has to be the hub for world leading companies with heightened interest in Africa, and Onyema freely admits that getting admitted by the WFE “is an important step in that journey”.
The title the NSE aspires to grab is the one that been held by the JSE – whose position as Africa’s number one stock Exchange has been aided in no small measure by its membership of the WFE.
Stronger Regulatory Environment
As WFE membership helps up investor-attraction its measures also guarantee strong regulatory environment, something the NSE will gain a lot from.
This is perhaps best put by WFE’s Board of Directors member and CEO of the JSE Nicky Newton-King; “This membership has been a long road for the Nigerian exchange. The WFE Review Committee tasked with their application commends them for the attention they have paid to putting in place the regulatory and technological infrastructure necessary, both for the NSE to meet global standards, as well as to position the Nigerian Stock Exchange for future growth.
WFE membership also means marked improvement for the Securities and Exchange Commission (SEC) which is the apex regulator of the NSE, and the stakeholders in the country’s market. The WFE before admitting the NSE also met Securities and Exchange Commission (SEC) of Nigeria, as well as the the Central Bank of Nigeria (CBN), the Central Securities Clearing System (CSCS) amongst others.
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