The Chartered Institute of Stockbrokers (CIS) has called for Pension Fund Administrators (PFAs) to step up their involvement in the equities market, aiming to bolster liquidity and foster growth.
In a recent statement, the institute highlighted this appeal during a courtesy visit to Mr. Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), who also holds a position as a stockbroker. The CIS leadership emphasized the significance of PFAs’ role in driving sustainable liquidity in the local equity market, noting that despite regulations permitting up to 25% of pension assets to be invested in equities, only about 10% of funds are currently allocated to this sector.
Mr. Oluwole Adeosun, President and Chairman of the CIS Council, underscored the importance of increased PFA participation, stating, “Given the critical role of pension fund investment in galvanizing liquidity in the domestic equity market, pension fund administrators should be investing a substantially higher proportion of their funds in equities.”
The CIS delegation also commended the appointment of senior stockbrokers to key positions in the economy by the Federal Government. Adeosun expressed confidence in the stockbrokers’ capacity to support the proposed recapitalization of banks within the next 24 months, citing past successes in similar exercises.
Touching on margin lending of banking stocks, Adeosun proposed that publicly listed bank securities should be eligible as marginable securities, subject to regulatory criteria. He emphasized the importance of margin lending in driving capital market growth and suggested that allowing bank stocks as marginable securities could attract more investors and stimulate market activity.
In response, Governor Olayemi Cardoso appreciated the CIS’s visit and pledged to review the raised issues comprehensively.
The CIS’s advocacy for increased PFA participation and proposed reforms in margin lending reflect efforts to enhance market liquidity and expand investor opportunities in Nigeria’s capital market.
