NASD OTC CEO speaks on how trading of NGX shares impacts the OTC market

The CEO of NASD OTC Securities Exchange, Bola Ajomale, recently spoke on the impact of the trading of Nigerian Exchange Group (NGX) shares on the OTC market. Following the demutualization of the Nigerian Exchange Group, its shares have been admitted for trading on the NASD OTC Securities Exchange, which handles unquoted public securities in Nigeria. Ajomale highlighted that this listing is a confirmation of the role they play in ensuring an orderly capital market in Nigeria. This move is set to pave the way for more transactions to be conducted on the platform, signaling a new era for the OTC market. Ajomale explained the critical role that NASD OTC Securities Exchange plays in the Nigerian capital market. Currently, there are over 40 securities being traded on the market, with NGX being the latest addition. These securities range from large multinational corporations to small startups, covering various industries such as financial services and construction. The market caters to a diverse range of investors, including corporate, international, regional, and local investors. Besides equities, the market is also starting to see structured deals and debt instruments being introduced. When discussing strategies to deepen activity in the market, Ajomale emphasized their focus on expanding the commercial papers segment rather than long-term bonds. He stated that they aim to broaden the market by including securities that are not commonly found on other exchanges, thereby fostering greater market participation and liquidity. Reflecting on the market performance in the first quarter, Ajomale noted a temporary slowdown due to the impact of the pandemic. However, he highlighted a resurgence in the second quarter with an increase in strategic investments and schemes of arrangement. This uptick in activity is expected to continue into the third quarter, promising exciting developments for the market. In response to a question about returning to pre-pandemic levels, Ajomale pointed out that the market landscape has permanently changed. He foresees the emergence of new instruments like blockchain and structural changes in market operations. While achieving pre-pandemic trading volumes may be feasible in the short term, the market structure itself is likely to undergo significant transformations. Looking ahead to the second quarter, Ajomale outlined expectations for the introduction of new instruments and platforms, particularly in the commodities exchange sector. He mentioned upcoming asset classes on the horizon, including NST products, and emphasized the importance of economic conditions in driving demand for these new offerings. Despite some economic challenges, the outlook remains stable, with potential for growth and innovation in the OTC market. Overall, Ajomale's insights shed light on the evolving landscape of the OTC market in Nigeria, marked by increased diversity in securities, a focus on innovation and new asset classes, and a vision for a transformed market structure post-pandemic.