Stockbrokers Insist on Creation of Stabilisation Fund

Stockbrokers Insist on Creation of Stabilisation Fund

Stockbrokers Insist on Creation of Stabilisation Fund

The Chartered Institute of Stockbrokers (CIS) is still pushing for the establishment of a stabilisation fund for the nation capital market as a way out of the downturn that has lasted over four years.

A senior council member of the CIS  disclosed this  in an interview with THISDAY last Monday, saying the forbearance being planned by the Federal Government would not solve the liquidity problem in the market.

The Coordinating Minister of the Economy and Finance Minister, Dr. Ngozi Okonjo-Iweala, had last week reiterated the Federal Government plan to work out a forbearance package for stockbrokers as part of measures to stimulate confidence in the Nigerian stock market and increase liquidity. Okonjo-Iweala gave the assurance at  the annual meetings of the African Development Bank (AfDB) in Arusha, Tanzania.

But the leading stockbroker explained that while the move by the government was a good development, he said  it did not  mean debt forgiveness.

“Debt forbearance does not mean debt forgiveness. It only allows the debtor to negotiate with the creditor so that they could  agree on the repayment terms. I believe some brokers are already enjoying forbearance despite the fact the government has not formally unveiled its package. What the market really needs is a Stabilisation Fund that would ensure direct injection of funds into the market,” the broker said.

The outgoing President of CIS, Mr. Mike Itegboje, had last March restated the need for a stabilisation fund, saying that would  bring back the much needed investor confidence into the market. According to him,  the fund would go a long  in addressing the margin loans overhang, which had been posing  a huge challenge to brokers.

He had noted that since the global meltdown, some countries had made use of such funds to cushion the effect of the meltdown on the market.

“We as stockbrokers are again renewing our call for a stabilisation fund for our market. This fund is very necessary as it would help to mitigate the losses incurred by investors and stockbrokers in the capital market in the last few years. And so, we want the federal government to look into this issue as many countries have taken the route of this fund for their market and Nigerian should not be an exception.”

Itegboje suggested that the Asset Management Corporation of Nigeria (AMCON) could take up the challenge of ensuring that such funds were properly used in the market.

The Association of Corporate Trustees (ACT) and former  Director-General of the NSE, Mrs. Ndi Okereke-Onyiuke, had backed calls on the FG to inject  funds into the capital market. The President of ACT, Mrs. Oluwatoyin Sanni and Okereke-Onyiuke, made the calls while appearing before the House of Representatives Ad Hoc Committee  that probed the near collapse of the capital market last month.


Related news
A golden chance in life

A golden chance in life

A golden chance in life
Mailfire view pixel