Stanbic IBTC launches securities lending product

Stanbic IBTC, a leading financial institution in Nigeria, has made a groundbreaking move by launching a securities lending product, a first of its kind in the country's financial markets. The launch took place last week, marking the commencement of commercial trade for securities lending in Nigeria. Akeem Oyewale, Chief Executive of Stanbic IBTC Nominees, highlighted the significance of this milestone, emphasizing the potential impact on the capital markets. The introduction of securities lending by Stanbic IBTC opens up new opportunities for market participants, offering increased liquidity and access to a diverse range of assets. Oyewale explained that the securities lending license obtained from the Securities and Exchange Commission (SEC) paved the way for this development, allowing independent parties to engage in commercial trades with the bank serving as the lending agent. One key aspect of securities lending is the ability for investors to leverage their assets effectively. Oyewale pointed out that if an investor holds a significant amount of stocks that they are not looking to sell immediately, they can now lend these assets in the market to other borrowers. This process not only enhances liquidity but also provides an avenue for fund managers to generate yield on their instruments. In assessing the readiness of the market for this innovative trading mechanism, Oyewale expressed confidence in the Nigerian financial landscape's ability to adapt to such advancements. He acknowledged the ongoing plans by the Nigerian Stock Exchange to introduce a central counterparty (CCP) in the market, which would further facilitate derivative trading. Oyewale positioned securities lending as a crucial element in the market's evolution, enabling investors to access positions that were previously inaccessible. Furthermore, the impact of securities lending on trading volumes is a key aspect of its anticipated success. While current trading volumes remain modest, Oyewale foresees a significant uptick in volumes during the first and second quarters of the upcoming year. He believes that the successful commercial trade executed by Stanbic IBTC will encourage other securities lending agents to promote this service to their clients, thereby enhancing market liquidity and participation. Drawing parallels with the impact of securities lending in other developed markets, Oyewale cited the example of South Africa, where the practice has revolutionized stock trading on the local exchange. The success stories from advanced economies like the US, UK, and Europe further underscore the transformative potential of securities lending in enhancing market dynamics and investor engagement. In conclusion, Stanbic IBTC's launch of the securities lending product heralds a new era for Nigeria's capital markets, bringing forth opportunities for increased liquidity, enhanced trading volumes, and improved market efficiency. As market participants embrace this innovation and deepen their understanding of securities lending, the stage is set for a dynamic shift in how assets are traded and utilized in the Nigerian financial landscape.