FG moves to stem downward trend of shares
Abuja - The Federal Government on Tuesday rescued the stock market with the appointment of a 16-man presidential advisory team to stem the continuous fall in the market. It also pegged the downward movement of prices of shares.
The team comprises members from both the public and private sectors and will meet regularly to articulate and implement medium and long term measures that are necessary for the healthy growth and development of the market.
Briefing State House correspondents after a meeting of the vice president, Dr. Goodluck Jonathan and stakeholders on the problem, Minister of Finance, Dr. Shamsudeen Usman, said the current situation in the capital market had been a source of concern to the government.
He said other measures taken by the government included issuing an exemption to permit share buyback up to 20 per cent while the Securities and Exchange Commission (SEC) and Nigerian Stock Exchange will also take administrative actions to stem the rate of new listing until the market is stabilised.
SEC, NSE and all capital markets operators have equally agreed to reduce their fees significantly while modalities for the establishment of capital market stabilisation fund are being worked out.
Members of the team are: Minister of Finance, Minister of Justice and Attorney General of the Federation, Minister of National Planning, Chief Economic Adviser to the President, Governor of CBN, Alhaji Aliko Dangote, DG, SEC; DG, NSE; DG, Debt Management Office; Managing Director, Union Bank Plc; Managing Director, Access Bank, Plc; Managing Director, Intercontinental Bank Plc, Mr. Bolaji Balogun, Ebilate Mac-Yoroki, Kayode Falowo and Oladipo Aina.
Usman said the presidential team was expected to meet regularly, adding that the NSE was taking steps to review its trading rules and regulations.
According to him, effective from today, maximum downward limit on daily price movement has been pegged at one per cent while the current five per cent limit on upward movement was retained.
SEC, the minister said, would release guidelines for market makers on the NSE before the end of the week.
“Pursuant to the meeting convened by the Federal Government with stakeholders of the Nigerian Stock Exchange held at the Presidential Villa, Abuja, on Tuesday, August 26, 2008, the following decisions were reached:
“A presidential advisory team on the Nigerian capital market has been constituted; the office of the Attorney General of the Federation has been directed to issue an exemption to the provisions of the relevant sections of the Companies and Allied Matters Act, 1990 on share buy-backs to permit quoted companies to buy back up to 20 per cent of their shares.
“The Securities and Exchange Commission’s approval would be necessary before any quoted company is allowed to undertake any share buy-back.
“The SEC, the Nigerian Stock Exchange (NSE) and all capital markets operators have agreed to reduce their fees significantly. For example, the NSE, with effect from Wednesday, August 27th, will reduce its fees by 50 per cent.
“The modalities for the establishment of a Capital Market Stabilisation Fund are being worked out to intervene promptly, effectively and prudently in the Nigerian stock market as the need arises.
“The CBN is taking appropriate measures to review the liquidity situation in the economy and take appropriate measure to improve the liquidity in the system if required.
“The NSE is taking steps to review its trading rules and regulations. In the interim, effective Wednesday August 27, 2008, it has taken the following steps:
“One per cent maximum downward limit on daily price movement while the current five per cent limit on upward movement is retained; The SEC would release guidelines for market makers on the Nigerian Stock Exchange before the end of the week.
“Henceforth, there will be strict enforcement of NSE’s listing requirement with zero tolerance for infractions. The SEC and NSE will also take administrative actions to stem the rate of new listings until the market stabilise.
“Having gone through the steps for delisting, the stock exchange will delist all the moribund companies earlier advertised.
Source: Tribune
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