Four Things The NSE Can Do To Sanitise The Stock Market


If anyone agrees that technology checkmates corruption of processes and systems, then maybe the Nigerian Stock Exchange, might need to embrace the use of technology wholeheartedly.

There are news reports that The Exchange is gearing up to punish unauthorised dealing firms who are operating in the equities market without necessary permits.

Part of the complaints of the NSE is that there are market dealers who are and might be doing business in the stock market illegally. According to the reports, 70 of the dealing firms are those whose licenses had been revoked by the NSE between 1996 and 2007, and no longer active in the market. A total of 11 another trading firms, which have remained inactive for a consecutive period of over one year in breach of the stock exchange rule, were also summoned to appear on September, 28, 2016.

The final batch contains the names of five brokerage firms being investigated for ”unauthorised transactions” carried out by them. However, to reduce the headache of the exchange, here are some ideas to guard against such issues.

Measure One
Prune down the list of stock brokers. Similar to what happened in the banking sector, let brokerage firms merge. With this you can have fewer players that can be properly monitored.

Measure Two
Create a proper financial centre where all participants can really operate. This is without prejudice to the digital revolution that allows brokers to solely online. At least their physical address can be in the financial centre.

Measure Three
Digitise the whole process. This measure will weed out the inefficient and scrupulous brokers from the market. All brokers should then be hooked via application programming interface into a central system supervised and maintained by the NSE. This will curb market infractions and sharp practices in the stock market.

Measure Four
Create a whistle blowing site where anyone anonymously can send out information about bad dealers and illegal activities by dealers in the market. These ppol of information should not be made private but made available to the public so that anyone can see and get alerted.

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