Exchange holds planned introduction of depository receipts

The plan by the Nigerian Stock Exchange (NSE) to introduce depository receipts that would allow investors to purchase foreign company shares in naira has been put on hold for now.

The Chief Executive Officer (CEO) of the Exchange, Mr Oscar Onyema disclosed to Bloomberg in an interview. According to the report monitored by Business247 News Online, Onyema said it “was put on hold because of this foreign exchange issue”.

The Exchange revealed in the interview that it has seen a reduction in activity by almost half this year even after the Central Bank of Nigeria (CBN) allowed the domestic currency to float.

When the Central Bank of Nigeria removed the 197-199 naira to dollar peg on June 20 after more than a year, “we saw significant activity in the market and then it tapered off,” Oscar Onyema, chief executive officer of the bourse, said in an interview from the commercial capital, Lagos, on Wednesday. Foreign investors “want to see that there is credibility in this floating rate regime. They also want to see clarity in the allocation of foreign exchange.”

Transactions for the first half of the year decreased by 44 per cent to 624 .4 billion naira ($2 billion) from a year earlier, according to data from NSE’s website. “We have seen total reduction in market activity, both domestic and foreign, the foreign even more,” Onyema said.

The NSE All Share Index dropped 7.4 percent over the past year, according to data compiled by Bloomberg. The naira weakened 3.6 percent to 325.50 per dollar by 9:46 a.m. in Lagos, bringing losses this year to 40 percent. The report revealed.