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1 | X-FILES
`
X-FILES The Nigerian Bourse’s Bimestrial Newsletter
March 2013
NSE
The Origin of the
The NSE X-Files | Mar | 2014
Griffin 30
The Bull & the Bear
Office of the CRO
.ERM. The NSE
ETF
Stock ICONS
CAUGHT RED-HANDED!
Nigeria’s 1st Equity ETF Debuts on The NSE
2 | X-FILES
Contents
Editorial Board
Akanimo Akpabio
Cima Sholotan
Idowu Hussain
Okon Onuntuei
Pai Gamde
Rosemary Amagbor
Tobechukwu Ndoh
Nwando Ajene Managing Editor
Dante Ibidapo Martins Editor-In-Chief
Clifford Akpolo Deputy Editor-In-Chief
Message from the CEO 3
1st Equity-backed ETF debuts on The NSE 5
Facilitating the creation of an Integrated Capital Market 6
Senate backs Integration of W/African Capital Market 7
Wanted: The Almighty GTP 8
Newbies 9
The Origin of the Stock Icons 10
Caught Red-handed! 10
The NSE E R M 12
NSE Reshapes the Future of Finance 13
In preparation for Corporate Governance 14
Financial Toons 15
3 | X-FILES
Message from the CEO
Dear Colleagues:
February ran by quickly and was filled with a lot of activities. I kicked off the month by attending the Standard Bank West African Investor Conference where I spoke on the panel about: “Exploring how the investment framework is being strengthened and developed to drive increased participation and investment at the broad economy level”. I also attended the IBM smarter Planet leadership forum where I had a good meeting with the IBM global Chairman/CEO and shared the stage with her to discuss the “Africa Leadership Agenda”. Both sessions were very insightful and a good outing for the Exchange.
The next week was equally as busy. We hosted the WACMIC sensitization workshops which held in Lagos and Abuja. The last of the series will hold in Abidjan later in March. I must congratulate the team that worked tirelessly on making the workshops successful. We are well on
I and the rest of the management team are disposed to properly answering all questions and concerns you may still have with regards to the matter. As the first quarter gradually comes to an end, I encourage you all to keep performing at your very best. I hope you all have a blessed and wonderful month of March.
Oscar Onyema
-----
that worked tirelessly on making the workshops successful. We are well on our way to completing Phase 1 of the West African Capital Market Integration program.
We had the induction of newly qualified authorized dealing clerks in February as well. We welcomed the board of Investment and Securities Tribunal who visited the Exchange for a bell ringing ceremony, and a discussion with the Board of Trustees of the Investor Protection Fund of NSE. Both events went well, and I congratulate the members of staff we made them happen.
I believe that you have been fully sensitized about our tax obligations and the new payroll structure, and have decided on a clear repayment plan. I understand the difficulty and discomfort that we all would experience in fulfilling our tax obligations, and I hope to find ways to help alleviate some of the discomfort. I and the rest of the management team are
4 | X-FILES
1st Equity-backed ETF debuts on The NSE
The quest for our Exchange to become a sustainable and competitive market on the globe, received a boost as Vetiva Fund Managers Ltd, a wholly owned subsidiary of Vetiva listed the first equity-backed Exchange Traded Fund, Vetiva Griffin 30 Exchange Traded Fund (VG 30 ETF) on The NSE on Friday, March 14, 2014. The VG 30 ETF is an open-ended fund that tracks the performance of constituent companies of the NSE 30 index and replicates the price and yield performance of the index.
Receiving the management team of Vetiva at the facts behind the listings of the ‘ETF’, our Chief Executive Officer, Oscar Onyema lauded the group for building a great organization, describing the listing as remarkable to the growth of the leading Exchange in the sub-saharan Africa. Oscar expressed optimism that the ‘Griffin 30 ETF’ will broaden the range of financial products traded on the exchange in the country, considering the
diversification it gives investors and asserted that the Exchange hopes to engage other tradable indexes to deepen the stock market.
5 | X-FILES
6 | X-FILES
Facilitating the creation of an Integrated Capital Market
The Council is tasked with designing the
policy framework and managing the
implementation process that will
facilitate the creation of an integrated
capital market in the West African sub-
region.
The process for integrating the region's
capital markets began in 2010 with the
signing of a Memorandum of
Understanding (MOU) by the stock
exchanges and the regulatory authorities
in the sub-region. The MOU sets in place
the undertaking to deepen cooperation,
promote mutual assistance, and facilitate
the exchange of information and
consultation between the consenting
jurisdictions by way of the West African
Capital Market Integration (WACMI)
program.
Currently, the WACMI program is being
pursued in collaboration with the West
African Monetary Institute (WAMI), the
Bourse Régionale des Valeurs Mobilières
(representing eight West African
francophone countries), the Ghana Stock
Exchange, Nigerian Stock Exchange and
Sierra Leone Stock Exchange are the
participating markets.
WHY CAPITAL MARKET INTEGRATION?
The value proposition for integration
relates to the West African sub-region as
a strategic geographical area within
Africa. With a large and diverse
population of over 290 million people,
this translates into a consumer base with
significant domestic savings and investing
WHY CAPITAL MARKET INTEGRATION?
The value proposition for integration
relates to the West African sub-region as
a strategic geographical area within
Africa. With a large and diverse
population of over 290 million people,
this translates into a consumer base with
significant domestic savings and
investing potential. Achieving
integration will not only support
momentous growth in the markets, but
also facilitate the movement of capital
across the sub-region, creating flexibility
for issuers and investors.
WACMI SENSITIZATION WORKSHOPS:
NIGERIA AND GHANA
In the pursuit of this objective,
sensitization workshops were held on
February 7, 12 and 14, 2014, in Accra,
Lagos and Abuja, respectively. These
workshops are designed to inform capital
market operators on the progress of the
WACMI program, and to provide insight
into the proposed trading and settlement
structures, the proposed legal framework,
and the impending harmonized listing,
trading and settlement rules – all of which
are critical to the successful integration
efforts of the member countries.
WACMI Technical Committee Session WACMI technical committee sessions were recently held in Abuja (February 26
th – 28
th), hosted by the SEC, in which
rules and guidelines for the phased implementation of the WACMI initiative were developed. In this regards, the two committees, being (1) Trading,
WACMI TECHNICAL COMMITTEE SESSION WACMI technical committee sessions were recently held in Abuja (February 26
th – 28
th), hosted by the SEC, in
which rules and guidelines for the phased implementation of the WACMI initiative were developed. In this regards, the two committees, being: (1) Trading, Settlement, Clearing and
Depository and (2) Listing and Common Passport,
have composed the required documentation for Phase 1 (Sponsored Access) and Phase 2 (Qualified West African Brokers or QWABs), which will be presented to the WACMI Council on April 1
st and 2
nd in Abidjan.
The rules and guidelines for Phase 3 (West African Securities Market or WASM) will be developed during the next set of technical committee sessions as deemed by the WACMI Council.
HIGH LEVEL IMPLEMENTATION ROAD
MAP
The integration program will occur in
three phases as illustrated below:
The West African Capital Markets Integration Council (WACMIC) was inaugurated as the
governing body for the integration of West African capital markets. The over-arching
objective of the Council is to establish a harmonized regulatory environment for the issuance
and trading of financial securities across the region. The WACMIC comprises the chief
executives of the region's securities exchanges, and securities and exchange commissions.
TIMELINE
7 | X-FILES
Senate Backs Integration of W’African Capital Markets
The West African Capital Markets Integration Council (WACMIC) organized series of sensitization workshops to educate capital market operators on the workings of WACMIC on Wednesday, 12th and Friday, 14th February, 2014, in Lagos and Abuja respectively.
The Chairman of WACMIC and CEO of The Nigerian Stock Exchange, Mr. Oscar Onyema presented an overview of the integration program to the participants and he noted that "the success of this project, to a large extent, depends on the participation of key market stakeholders conducting transactions within the sub-region".
Mr. Onyema further said, “We have set for ourselves a very ambitious target of completing the first phase of integration by the end of March 2014, and commencement of implementation by April 1, 2014; and we believe it is achievable having carefully mapped out our implementation strategies”.
Speaking at the Abuja
sensitization workshop,
Chairman, Senate
Committee on Capital
Market, Senator Ayoade
Adeseun, said the
Nigerian parliament in
particular and ECOWAS
parliament in general are
fully in support of the
integration process.
8 | X-FILES
The Lens of Pai
Whew…finally it’s here. By now, it’s no
news that The NSE Graduate Trainee
Programme (GTP) is about to be rolled out.
I heaved a sigh of relief as I ran down the
stairs from the 22nd
floor to the 18th
floor
with excitement to share the good news
with my team sometime in October 2013
after the programme was approved for
implementation. It’s been a long time
coming, two years since the journey began
– (Shaking my head)… at the fact that this
was one of the deliverables I had even
before joining The Exchange. It got to a
point where I wasn’t sure it was ever going
to take off, because something somehow
somewhere seemed to hold it back. 2
years later, it is on the way to becoming a
reality.
A little insight on this programme, the GTP is
one of the CEO’s signature projects geared
towards building global talents locally, and
raising a new generation of leaders for the
capital market and Nigeria's economy. It is no
news that the market place is experiencing a
dearth of skilful talents thus the GTP is one of
the interventions designed to address the
gap and build human resources that can
meet the requirements of the NSE and the
Capital market ecosystem. It is also an
initiative designed to serve as part of the
Corporate Social Responsibility and
Sustainability strategy of The Exchange.
Graduate trainee programmes have long
been popular with banks, oil and gas
companies and financial institutions as
well as across many other sectors. So why
is the NSE considering a GTP now, after all
there are so many programmes out there,
programmes that have been tried and
tested? Why should a graduate consider
our programme over another?
I believe these are some of the questions
we are all asking? While there is no doubt
I believe these are some of the questions
we are all asking? While there is no doubt
that there are many other great and
established GTPs out there, so also are
there about a 100 times more graduates
than these programmes can accommodate.
Also, the capital market ecosystem is yet to
fully employ this strategy which potentially
holds the key to its survival and
sustainability. This implies that there is an
even greater motivation to get involved in
the development of skills and competencies
for the Capital Market sector.
With the roll out of the programme, we
have already started to see the value of the
programme with the increase in likes and
engagement on our Facebook page which
has translated to a significant improvement
of our brand recognition and positioning in
online space.
The GTP shall bring together graduates who
have demonstrated impressive academic
ability but have little or no experience in the
world of work and help to ease these
graduates into the world of work by giving
them the skills necessary to become part of
a larger team.
Research has shown that a GTP platform is
one that helps set the career stage for any
participating graduate. A 2006 CIPD survey
on graduate training programmes revealed
that those on graduate training schemes
were more likely to start on better salaries
and also earn considerably more after a few
years in the workplace than those who were
not on graduate training programmes and
this is still true across many industries in
2014. It is therefore our belief that the
programme will provide this opportunity for
the trainees.
By the end of the programme, the NSE
Graduate Trainee is expected to be a
developed capital market professional,
logical thinker, proactive, tenacious,
Graduate Trainee is expected to be a
developed capital market professional,
logical thinker, proactive, tenacious,
energetic, and hardworking and have a
great attitude. The Graduate Trainee shall
be a team leader who sees him/herself
leading the growth of the capital market in
Nigeria, Sub-Saharan Africa and Africa at
large.
The programme has been designed to be
rich in character and content covering both
soft and technical skills, and competency
development. It brings together subject
matter experts that have excelled in various
fields of endeavour to serve as Faculty for
the programme. These subject matter
experts shall also serve as Ambassadors for
the programme and help to promote its
course within and outside The Exchange.
As we begin what in many years from today
will be considered a laudable legacy we
continue to seek your support in making it a
best in class programme. That by your
goodwill, encouragement, knowledge
transfer, coaching, mentoring and support,
the NSE GTP will become the standard for
other graduate development initiatives.
| The Almighty GTP |
-----
9 | X-FILES
Exchange Newbies
ADETUNJI ADODO Dispatch Officer
Administration Department
MCSTANFORD NWOGU Storekeeper
Administration Department
Gidado Yusuf Ali
OGECHUKWU UDOJI Compliance and Mediation Broker Dealer Regulation
ENOMA ODIA
IT Auditor Internal Audit Department
HENRIETTA OMORAGBON Contact Centre Analyst
Transformation & Change
10 | X-FILES
Découvrir Jo .
As I am sure a lot of us know, a “bear” market, or when someone is being “bearish” in this context, is marked by investors being very conservative and pessimistic, resulting in a declining market generally marked by the mass selling off of stock. A “bull” market is simply the opposite of that, with investors being aggressive and positive, with stock prices rising as a result of this optimism. This “bull” and “bear” terminology first popped up in the 18th century in England.
There are a couple different possible sources for the “bear” part of this tandem, but the leading theory is that it derived from an old 16th century proverb: “selling the bear’s skin before one has caught the bear” or alternatively, “Don’t sell the bear’s skin before you’ve killed him,” equivalent to, “Don’t count your eggs before they’re hatched.”
By the early 18th century, when people in the stock world would sell something they didn’t yet own (in hopes of turning a profit by eventually being able to buy the thing at a cheaper rate than they sold it, before delivery was due), this gave rise to the saying that they “sold the bearskin” and the people themselves were called “bearskin jobbers”.
One of the earliest references of this comes from an issue of The Tatler, April 26, 1709:
“Forasmuch as it is very hard to keep land in repair without ready cash, I do, out of my personal estate, bestow the bear-skin, which I have frequently lent to several societies about this town, to supply their necessities; I say, I give also the said bear-skin as an immediate fund to the said citizens forever…”
Yet another early instance of the term is in Daniel Defoe’s The Anatomy of Change Alley, published in 1719, around the time the term was popularized to something of the same type of definition we use today:
“Those who buy Exchange Alley Bargains are styled buyers of Bear-skins”
The use of the word “bear” in this way was popularized thanks to one of the early market bubbles known as the South Sea Bubble. While it was a long and incredibly complex market scheme that led to the bubble, the gist of it was that the South Sea Company, formed in 1711, was granted by Britain a monopoly on all trade to South America and would be given an annual sum (6% interest plus expenses) from the government. In exchange, the new company agreed to take over large portions of the government’s debt. (In fact, this was primarily how the company actually made money throughout its century and a half it was in business, simply by dealing in government debt.)
Thanks to this deal and an amazing amount of government corruption, insider trading, and other unscrupulous practices by certain shareholders who knew well that the company’s trade business had little hope of ever being profitable, the burgeoning company’s stock soared. At its peak, based on the stock price, the company was worth about £200 million (by purchasing power, today this would be about £24 billion or $37 billion; by average earnings, it would be £350 billion or $537 billion).
As to the “bull” name for rising markets, in this case we have to do a little more speculation as the documented evidence just isn’t there. The leading theory is that it came about as a direct result of the term “bear”. Specifically, the first known instance of the market term “bull” popped up in 1714, shortly after the “bear” term popped up. At the time, it was something of a common practice to bear and bull-bait. Essentially, with bear baiting, they’d chain a bear (or bears) up in an arena, and then set some other animals to attack the bear(s) (usually dogs) as a form of entertainment for spectators seated in the arena. While bears were one of the more popular animals to use in these games, bulls were also commonly used.
In any event, the popularity of bear and bull baiting, along with perhaps the association with bulls charging, is thought to have probably been why “bull” was chosen as something of the antithesis of a “bear”, shortly after “bear” first popped up in the stock sense. But, of course, we can’t be at all sure on this one as there wasn’t the more lengthy documented progression of definition as with the “bear” term.
TODAYIFOUNDOUT.COM
| Origin of the “Bull” and the “Bear” |
This expression, “caught red-handed”, has its origins in Scotland around the 15th century. Given the context it was often used in the earliest references, the phrase “red hand” or “redhand” probably came about referring to people caught with blood on their hands.
The first known documented instance of “red hand” is in the Scottish Acts of Parliament of James I, written in 1432:
“That the offender be taken reid hand, may be persewed, and put to the knawledge of ane Assise, befoir the Barron or Landeslord of the land or ground, quhidder the offender be his tennent, unto quhom the wrang is done or not… And uthers not taken reid hand, to be alwaies persewed befoir the…”
It subsequently popped up numerous times in various legal proceedings in Scotland, nearly always referring to someone caught in the act of committing some crime, such as “apprehended redhand”, “taken with redhand”, “caught redhanded” etc.
The meaning was then the same as now. Somebody taken redhand was either in the act of committing a crime or with clear evidence of it about him. Though the original reference was to literal red hands, those of a murderer stained with the blood of his victim, it has become broadened to refer figuratively to other crimes, for example to a thief being caught carrying stolen items. In those days being caught red-handed usually meant a death sentence. Today, while the punishment is likely to be far less draconian, the idea of being discovered in the middle of wrong-doing still remains with this expression
CULLED FROM LIVESCIENCE.COM
|CAUGHT RED-HANDED?|
11 | X-FILES
facebook.com/TheNigerianStockExchange
twitter.com/NSEcontact
12 | X-FILES
My people, businesses face risk every day and without risk, a business or organization would neither grow nor thrive.
Around the world, Risk Management has become a key function in most large organizations and this brings us to question “what exactly is this Risk Management?”
Risk management is the process of identifying, quantifying, and managing the risks that an organization faces. These risks include strategic risk, operational risk, market and credit risk, regulatory risks etc.
While it is impossible to eliminate all types of risk from an organization, it is important that these risks are properly understood, managed and controlled within acceptable tolerance levels and in the context of the overall corporate strategy.
The management of risks within an organization is the primarily responsible of the Risk Management Department. The Exchange recently created an Enterprise Risk Department to oversee the management of the full spectrum of risks using industry best standards.
The purpose of the ERM department is to enhance the Exchange’s ability to achieve its mission, vision, and strategic objectives and strengthen its competitive position by fostering an enterprise -wide culture of risk and opportunity awareness and providing a structured, consistent, and continuous process for the early and proactive identification, monitoring and controlling of the spectrum of risks and opportunities faced by the exchange.
The ERM department is headed by the CRO: Tunji Kazeem The CRO is responsible for developing ERM tools, practices, and policies to analyze, manage and report risks according Council approved enterprise risk management
mission, vision, and strategic objectives and strengthen its competitive position by fostering an enterprise -wide culture of risk and opportunity awareness and providing a structured, consistent, and continuous process for the early and proactive identification, monitoring and controlling of the spectrum of risks and opportunities faced by the exchange. The ERM department is headed by the CRO: Tunji Kazeem The CRO is responsible for developing ERM tools, practices, and policies to analyze, manage and report risks according to Council approved enterprise risk management framework. Also work with business units to establish, maintain and continuously improve Risk Management capabilities The CRO’s background:
Tunji comes with over 20 years of experience in the financial industry, specifically in Risk Management. Over the years, he has led several mission critical and transformational enterprise wide risk initiatives at top-tier financial institutions, involving policy formulation, risk pricing/ valuation, implementing and managing treasury /risk strategies across a wide array of asset classes and markets. He also has deep domain knowledge of market, credit, liquidity and regulatory/operational risk all of which he has gained at various financial institutions such as Citigroup, Fannie Mae and Standard and Poor’s before joining The Exchange.
He holds a degree in Economics and Accounting with an MBA in Investment Management from Columbia Business School.
VISION
The vision of ERM Department is to promote
an efficient and effective management of risk,
increase risk awareness across the Exchange
and serve as a strategic partner to all
departments on risk related issues.
MISSION
Provide leadership in setting risk management policies and oversight. This will be accomplished by implementing a robust risk management framework for identifying, assessing, managing, and controlling the broad spectrum of risks and opportunities relevant to the Exchange’s strategic and financial objectives.
In support of this overall vision, ERMD has
established the following goals and objectives:
GOALS AND OBJECTIVES:
Author and provide oversight for the implementation, development and maintenance and consistent application of the Exchange’s ERM Framework.
Monitor the risk exposure and ERM activities of the Exchange.
Ensure that a robust risk framework is developed to ensure that day-to-day decisions are formulated on evidence-based decision making principles and linked to the strategic objectives and risk appetite of the Exchange.
Report to the Risk Committee on the significant risks affecting the Exchange and how such risks are being managed.
Assist all divisions/departments at the Exchange in embedding the risk management framework into their daily processes.
Establish KPIs and KRIs designed to drive behaviours consistent with our risk appetite and tolerance.
Introducing the ERM Department
13 | X-FILES
NSE Reshapes the Future of Finance
The West African Capital Markets Integration Council (WACMIC) organized series of sensitization workshops to educate capital
On Thursday, March 13, 2014, the Nigerian Stock Exchange conducted a school outreach programme in Government Secondary School, Owerri. This programme was organized in partnership with the Central Bank of Nigeria and Junior Achievement (JA). The aim was to educate secondary school students on the importance of appropriately managing their money as well as taking up investments as a means of securing their future.
It featured a very interactive teaching session
on the topic of Financial Literacy 101. It was
anchored by Mr. Bola Adeeko, Head,
Corporate Services Division of the Nigerian
Stock Exchange.
The students were also presented with the
Financial Literacy education and information
materials. The students and teachers were
very excited and look forward to such
programmes in the future.
It featured a very interactive teaching session on the topic of Financial Literacy 101. It was anchored by Mr. Bola Adeeko, Head, Corporate Services Division of The Nigerian Stock Exchange. The students were also presented with the Financial Literacy education and information materials. The students and teachers were very excited and look forward to such programmes in the future.
.
In line with the commitment to improve Financial Literacy and Inclusion in Nigeria, the Nigerian Stock Exchange (NSE) commemorated the
2014 Global Money Week in partnership with Financial Literacy Steering Committee.
During the week, the NSE hosted and participated in series of educational programmes aimed at engaging young people in knowledge
sharing about how money works, savings, investing, creating livelihood, gaining employment and entrepreneurship. The Exchange was
able to directly reach over 600 students from over 20 secondary and primary schools with an indirect effect on about 3000 young people
across our operating environment.
On Thursday, March 13, 2014, the Nigerian Stock Exchange conducted a school outreach programme in Government Secondary School, Owerri.
This programme was organized in partnership with the Central Bank of Nigeria and Junior Achievement (JA). The aim was to educate secondary
school students on the importance of appropriately managing their money as well as taking up investments as a means of securing their future.
It featured a very interactive teaching session on the topic of Financial Literacy 101. It was anchored by Mr. Bola Adeeko, Head, Corporate
Services Division of the Nigerian Stock Exchange.
The students were also presented with the Financial Literacy education and information materials. The students and teachers were very excited
and look forward to such programmes in the future.
14 | X-FILES
Listed Companies Prepare for CGRS
The Nigerian Stock Exchange (NSE) in partnership with the Convention on Business Integrity (CBi) hosted a Breakfast Session for listed companies on January 29, 2014 at the Stock Exchange building in Marina, Lagos. The programme, which brought together senior executives from listed companies across various industry sectors in Nigeria, is in line with The NSE's plan to ingrain Corporate Integrity into the fabric of its listed companies through the establishment of a Corporate Governance Rating System (CGRS).
15 | X-FILES
Financial Toons!