Post made available for securities lending by four companies listed on the Nigerian Exchange (NGX) Limited.
These publicly quoted organisations are Zenith Bank, GTBank, MTN Nigeria and Dangote Sugar, according to a notice from the exchange.
In the disclosure sent to Naija247news on Tuesday, it was disclosed that Zenith Bank put down the highest volume of shares for the purpose, 77,333,000 units.
In the notice, which said the figures were as of Monday, April 12, 2021, Dangote Sugar followed with 43,000,000 units, while GTBank offered 31,095,000 units, with MTN Nigeria volunteering 11,196,000 million.
Meaning of securities lending
According to the NGX Group, securities lending involves the practice of loaning or transferring financial assets like stocks, bonds and others to another party from the holder for a fee.
For study.com, securities lending allows investors to borrow shares, sell them and buy them back at a lower price in the future. If all goes as planned, the short seller is able to return the borrowed shares and keep any profits. Without the ability to borrow securities, investors would have to buy a stock before they sold it.
This market practice, according to the former acting Director-General of the Securities and Exchange Commission (SEC), Ms Mary Uduk, is good for the Nigerian capital market because it would deepen liquidity, as well as offer more returns to investors and all parties involved, adding that the commission has rules in place to encourage market confidence.
She had pointed out that securities lending is a useful trading tool for short selling, hedging, and arbitrage. Explaining that hedge funds can also partake more in the Nigerian capital market as the SEC develops securities lending activities.
“We have a framework which has been approved. However, we noticed that it is not being fully explored. What we want to do now is to see what restrictions we can remove and what enlightenment we can do to ensure that other necessary parties key into the rules.
“We are encouraging them to go into securities lending. They are being encouraged to lend out these securities, they make money out of it,” Ms Uduk had said at an event held in Abuja in December 2019.