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Equity lending: SEC engages PenCom for review of guidelines

By Peter Egwuatu

THE Securities and Exchange Commission, SEC has revealed that it has begun negotiations with institutional investors like the National Pension Commission, PenCom, to review its guideline to enable Pension Fund Administrators, PFAs, to lend their equities in the stock market.

Windows for porting of PFAs underway as PenCom deploys ECRS

Disclosing this the Acting Director General, Ms. Mary Uduk, in a statement made available to Vanguard, said: “There are many institutional and even some individual investors that sit on large pools of stocks which they do not trade actively. A vibrant securities-lending market will provide liquidity to such stocks and earn some returns for both the lender and the borrower.

“We have a committee which has been engaging all institutional investors that have substantial holding of equities. The essence of having this securities lending is to actually deepen our market. All of us are contributing to our pension’s accounts and these are being investing in equities. What they do is to buy and hold; they don’t sell.

“All of us are contributing to our own pension accounts and these PFAs are buying equities. What they do is to buy and hold, they don’t sell and they hold it, so the essence of securities lending is now to give room for them to make money and so that the money will now add up to their own contribution fund. ‘‘We have a framework which has been approved and we are encouraging the market to go into self-lending by meeting these institutional investors.”

Explaining further, she noted that ‘‘as PFAs are the highest institutional investors in the stock market, they will now lend out these securities and when they lend out, it will be credited back to the pension fund account. At the end of the contract, they will get their securities back. Instead of holding the securities, they are making money out of it; that is the essence.’’

In this connection, Uduk, therefore stated: “The SEC is engaging PenCom to see it as an investment opportunity. The discussions are ongoing to come up with their guideline based on their provision of the Act to allow securities lending to take place.

“In addition, we are engaging another institutional investor, AMCON (Asset Management Company of Nigeria). It is a holistic approach to have a win-win situation in our market.”

SEC phases out unclaimed dividends

She said the essence of securities lending is to give room for the investors to make money so that the profit can then be added to what contributors would get.

Vanguard

The post Equity lending: SEC engages PenCom for review of guidelines appeared first on Vanguard News.


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