Thursday, 8 October 2015

SEC TO GROW NON-INTEREST PRODUCTS TO QUARTER OF MARKET CAPITALIZATION

The Securities and Exchange Commission (SEC) has revealed plans to grow the size of non-interest products to 25 per cent of the overall market capitalization. This disclosure was made by the Director General of SEC, Mr. Mounir Gwarzo, at a round table meeting with a delegation led by the Lord Mayor of London Alderman Alan Yarrow and Nigerian regulators in Abuja.

Mounir Gwarzo, who was represented by Zakawanu Garuba, Executive Commissioner, Corporate Services, stated that: “Our goal is to boost non-interest capital market product innovation so that the segment can be at least a quarter (25 per cent) of the overall market capitalization. The SEC wants to build a strong regulatory regime for non-interest products, encourage stakeholders in the non-interest capital market and ensure the emergence of Nigeria as a prominent non-interest capital market hub both at the regional level and globally.”

He further stated that the SEC was considering modalities for setting up a Sharia Advisory Council as a body of experts to advice on non-interest product applications.

He said: “To boost liquidity of non-interest products, the SEC is working with a committee to support the FMDQ platform to enable secondary market trading of the products. We are also engaging the Central Bank of Nigeria (CBN) to obtain liquidity status for non-interest products (especially the sukuk). The efforts are hinged on the fact that Nigeria has more than 80 million Muslims compared to Malaysia’s total population of 30 million. In addition, Nigeria has a larger economy than Malaysia’s, being the largest economy in Africa.”

To harness this potential, Gwarzo said proper planning was imperative which was “why at the SEC, we set up an industry-wide Committee of experts last year to produce a 10-year master plan on non-interest capital market product. Their recommendations have been incorporated into the broader capital market master plan which we have begun implementing.”

In his response, Alderman Alan Yarrow, the Lord Mayor of London, pledged the United Kingdom’s government support stressing that “two things were universally agreed on, Islamic finance will be massive and it’s here to stay.”

Yarrow expressed concerns that “the difficulty of defining what Islamic finance actually is, is with different scholars and different countries supporting different rules.”

Alderman Alan Yarrow said there “is a huge opportunity to offer Islamic finance as an alternative investment and finance model for both Muslims and non Muslims alike.”

Nigeria’s Exchange he said has a crucial role to play in that story since it is the second largest Exchange in sub-Saharan Africa describing it as “the Gateway to African markets and as such, the whole of Africa, to some extent, relies on Nigeria.”

The UK he said is prepared to help Nigeria “from looking at Nigeria’s legal framework, to helping to up the skills of your young, dynamic and ambitious population. London has the expertise, the variety and the capacity to help. And most of all, we offer the willingness and we stand ready to do our bit.”

Alderman Alan Yarrow said “there is already a thriving partnership between the Exchanges and an excellent pipeline of Nigerian Businesses listing in London. But in the past few years, things have been shaken up by the arrival of non-interest finance and in particular, Islamic Finance.”

He called on members of the Nigerian capital and financial derivatives markets to talk to him, and the business delegation and TheCityUK. Whether it’s about Islamic Finance, Legal services or education, training and qualifications. That’s why we are here. And we all look forward to helping you in whatever way we can.” (vanguard)