Nigerian Pension Fund Administrators Set to Engage in Securities Lending, Boosting Capital Market
The National Pension Commission (PenCom) has announced its efforts to establish regulations allowing Pension Fund Administrators (PFAs) to engage in securities lending within the capital market. This development was disclosed during a workshop co-organized by PenCom, the Nigerian Exchange Limited (NGX), and the Securities and Exchange Commission (SEC) on Wednesday. The workshop focused on the implications of the Business Facilitation Act 2023 in catalyzing the expansion of securities lending in Nigeria.
Ibrahim Kangiwa, Head of Investment Supervision at PenCom, highlighted that the limitations imposed by section 89 of the Pension Reform Act 2014 had previously restricted PFAs from participating in securities lending. However, with the enactment of the Business Facilitation Act 2023, PenCom is now in a position to develop guidelines to facilitate securities lending.
Kangiwa further emphasized that the concept of securities lending had already captured the attention of the commission. He noted that PenCom is concurrently revising investment regulations governing PFAs’ activities. The goal is to broaden the range of available assets and deepen the investment opportunities for PFAs.
Jude Chiemeka, Divisional Head of Capital Market at the Nigerian Exchange Limited (NGX), expressed the exchange’s commitment to collaborative efforts with stakeholders to enhance securities lending activities. He underscored the exchange’s dedication to advancing securities lending transactions, contributing to the broader goal of fostering capital market development in Nigeria and across Africa.
Opinion: The move by PenCom to allow Pension Fund Administrators to participate in securities lending demonstrates a significant step towards diversifying investment options within Nigeria’s capital market. The synergy among regulatory bodies and the capital market aims to pave the way for enhanced market liquidity and growth. Collaborative efforts between regulatory bodies and the capital market aim to stimulate growth and liquidity in Nigeria’s securities lending landscape.