The Capital Market And The Challenges Of Real Sector Financing In Nigeria.
[A STUDY OF THE PERIOD 2000-2009]

• Prepare adequate guidelines, organize training programmes and disseminate information necessary for the establishment of Securities Exchanges and Capital Trade Points;
• Register and regulate corporate and individual capital market operators as well as capital market advisers and consultants such as solicitors, accountants, engineers and surveyors;
• Register and regulate the workings of Venture Capital funds and Collective Investment Schemes, including Mutual Funds;
• Register rotating savings schemes such as esusu and adashe for statistical purposes;
• Facilitate the establishment of a nationwide system for securities trading in the Nigerian capital market in order to protect investments and maintain fair and orderly markets;
• Facilitate the linking of markets in securities through modern communication and data processing facilities in order to foster efficiency, enhance competition, and 49 increase the information available to brokers, dealers and investors.

The ISA provides for the Securities and Exchange Commission to make rules and regulations for the market as the need arises. It also provided for the establishment of the Investment and Securities Tribunal (IST), which now ensures that all capital market disputes are resolved within 90 days. The IST is an equivalent of a Federal High Court. The ISA has been further reviewed and a re-enactment will soon be made. Other reforms that have taken place in the capital market include:

• Review of minimum capital requirement for Operators
• Reduction of transaction costs
• Introduction of a Code of Corporate Governance
• Reactivation of the bond market
• Introduction of Market makers
• Introduction of shelf registration
• Development of a commodity market Some of these reforms and their impact/implications for the capital market and ability to boost the real sector are discussed below:

Review of Fees: The Securities and Exchange Commission recently took steps to reduce the cost of dong business in the market in its effort to make the market internationally competitive and investor friendly. After due consultation with stake holders, it authorized a 40% downward review of fees and commissions charged. There are already indications that this policy action has made the market more attractive to participants. Furthermore, in the wake of the recent banking and insurance sector consolidation, the Commission also collaborated with the Central Bank of Nigeria and National Insurance Commission on initial public offers, public offers and mergers and acquisitions necessitated by the exercise, giving concessions where necessary. Recapitalization of Capital Market Operators: To make operators contribute more to the growth of the real sector and the economy in general, the minimum paid up capital has been reviewed upwards. Capital requirement for Issuing houses was increased from N150 Million to N2 Billion; broker/dealers from N70 Million to N1 Billion; Clearing and Settlement agencies from N500 Million to N1 Billion and Registrars from N50 Million to N500 Million. Underwriters are now required to increase their minimum capital base from N100 Million to N2 Billion; Fund/Portfolio Managers from N20 Million to N500 Million, while corporate sub-brokers with a capital base of N5 Million are now to shore up their capital base to N50 Million. The recapitalization of operators in the capital market is to strengthen them financially for international competitiveness and more importantly to match their capital with their exposure. This will also help to weed-out quacks from the capital market as the greatest cases of irregularities and fraud are often associated with undercapitalized operators who have little or no investments to loose. Introduction of Market Makers: An on-going development in the Nigerian capital market is the introduction of market makers whose minimum capital base is fixed at 2 Billion. The Commission is currently collaborating with The Nigerian Stock Exchange to introduce primary dealer market makers for the equity sector of the market. This is in addition to the market makers who already operate in the bond sector. The infrastructure for stock lending and borrowing is also being fine-tuned to pave way for the take off of more robust trading in derivatives. The implication of these measures is that the market would be more vibrant and liquid; thereby, making its role of financial intermediation more efficient. Other Capital Market Reforms and their Impact on Micro and Agricultural Financing are: Capital Trade Points (CTPs): Capital Trade Points are conceived by the ISA as mini stock exchanges through which small companies can get listed and avail themselves of the opportunities offered by the capital market. The Commission has therefore embarked on sensitization of potential promoters of CTPs in five locations – Kano, Jos, Warri, Ibadan, and Akwa Ibom, who signified their intention to register and operate such exchanges. The Commission has gone a step further to hold interactive sessions with the promoters in Ibadan, Jos and Benin. 

Benefits of CTPs: When operational, the CTPs are expected to:

(a) Provide facilities for the quotation and ready marketability of shares and stocks of small companies, thereby increasing liquidity in the financial system;
(b) Give opportunities for investors to invest in local companies and benefit from any profit they make;
(c) Provide local opportunities for borrowing and lending purposes by companies;
(d) Through participation and ownership, provide a healthy and mutually acceptable, environment for participation and cooperation of indigenous companies. Commodity Exchange: As part of the on-going reform of the Nigerian capital market, the former Abuja Stock Exchange was converted into a Securities and Commodity Exchange on August 8, 2001. A commodity exchange facilitates trade in commodities as opposed to shares and bonds. The Abuja Securities and Commodities Exchange (ASCE) eventually commenced operation on 25th July, 2006, trading manually in six (6) selected