WITH the huge depletion in volume of transaction in the primary market of the Nigerian Stock Exchange (NSE), the First Registrar Limited Managing Director, Mr. Bayo Olugbemi, has attributed the lull in that segment of the market to illiquidity.Speaking on why there is no new issues in the market in recent times in an interview, Olugbemi said the dearth followed the huge price drop of equities at the stock market.He said there was no liquidity in the market and that what were witnessed in 2005, 2006 and 2007 were regulatory induced. It was because the share capitals of banks were raised. The few ones that came in recent times were through rights issues and they were grossly undersubscribed. Any company which is coming out now needs the money for expansion and developmental purposes, but they are cautious because of the liquidity situation.On the issue of registrars being accused as the primary source of delay in the issuance and delivery of share certificates to the owners, Olugbemi said the blame should not be put at the door step of registrars alone but on every operators in the market.According to him, There were committees set up by the SEC on these issues after the massive public offerings in 2004, 2005, 2006 and 2007. A lot of committees were set up on ways to make public offerings better than before. Prior to 2004, we had the offer period of four weeks, for offers to open and two weeks after the closure for returns to be made by various collecting agents and two weeks to process them.The question we were asking was, when a company had an offer that was not as massively subscribed to in terms of volume and the number of subscribers, we had the same period of two weeks to process. When the same bank did a public offer in 1992, less than 30,000 people subscribed and they had two weeks to process it, it was much easier. Now that we had another offer with over a million subscribers, they still gave the same two weeks to do the processing.It wont work and that was why we had a lot of delays in those offers, because of the volume of subscription. There are other challenges like power, human resources, capacity among others. However, after the offers, all the participants in the industry came together under the leadership of SEC to review the capital market operations and several committees were set up which include the registrars infrastructure review c ommittee and the Technical Committee on Dematerialisation.All of them were set up to review the market and we have submitted our reports, but they are yet to be implemented. We have made recommendations on allotment. The old system allows for multiple applications. We recommended modified equal number of units. It allows for equity. With that, there will be disincentive for multiple applications. Book building will also eliminate multiple applications.What we are saying is that SEC should implement some of the recommendations of the committees, he stated.
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