Non-Interest Capital Market Progress Report
Progress report on the implementation of the 10-year Non-Interest Capital Market Master Plan by the Securities and Exchange Commission, Nigeria. Updates on collaboration with PENCOM and CBN, expansion of allowable instruments for pension fund assets, liquidity management tools, extension of liquid asset status to Sukuks, and promotion of secondary market liquidity for Non-Interest Capital Market instruments.
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Presentation Transcript
Securities and Exchange Commission, Nigeria (SEC) REPORT OF THE IMPLEMENTATION SUB - COMMITTEE ON THE 10 - YEAR NON-INTEREST CAPITAL MARKET MASTER PLAN April 2016
TERMS OF REFERENCE Liaise with the National Pension Commission ( PENCOM ) on the inclusion of non-interest instruments as allowable instruments for pension fund assets. 1 Work with the Central Bank of Nigeria (CBN) on: the conferment of liquid asset status on non-interest capital market products and the issuance of non-interest T-Bills, Bonds, CPs Bas etc. 2 Consider other opportunities to actualize the Committee s objectives. 3 1
PROGRESS REPORT- PENCOM Expansion of the scope of allowable instruments for pension fund assets to include non-interest instruments and funds. Aim Current Situation This has been reflected in the draft regulation which is expected to be approved by the PENCOM Board when constituted. Effect of Guidelines Upon approval, PFAs will be able to invest pension fund assets in non-interest instruments and funds. 2
PROGRESS REPORT - CBN Provide liquidity management tools for non-interest financial institutions by the issuance of short-term NICM instruments by the CBN. Aim Available non-interest instruments issued by the CBN suffer from two major defects: nil/low returns or non-compliance with the shari'ah standards by the operators shari'ah boards Current Situation set The Committee had a working meeting with the CBN during the quarter Action/ Next Steps The CBN promised to liaise with operators to fine tune the existing liquidity instruments. 3
PROGRESS REPORT - CBN Extension of liquid asset status to Sukuks Aim Current Situation The current CBN guidelines for granting liquid asset status to state government bonds does not expressly refer to Sukuks. The Committee had a working meeting with the CBN on its proposal to expand the conventional guidelines to accommodate Sukuks Action/ Next Steps The CBN said the draft guidelines were still undergoing review internally 4
PROGRESS REPORT -SECONDARY MARKET LIQUIDITY Promote secondary market liquidity for NICM instruments Aim NICM instruments are only tradable on the Nigerian Stock Exchange Current Situation Action/ Next Steps The FMDQ has submitted draft listing guidelines to the SEC for approval 5
OTHER INITIATIVES: ENGAGE PROSPECTIVE ISSUERS Sensitize key corporate organizations and state governments across the geo-political zones Target The Commission & Sokoto State Government held a high-level roundtable to sensitise key stakeholders on tapping into the NICM Action The SEC is working with the DMO to build capacity on NICM Hold another roundtable in the South-West geo political zone Next Step Continue the engagement with the DMO towards a sovereign issuance 6
