THE CRISIS IN NSE

The drastic decision of the Securities and Exchange ommission (SEC) to sack the Director-General of the Nigerian Stock Exchange (NSE), Prof. Ndi Okereke-Onyiuke, and the suspension of Alhaji Aliko Dangote as president of the Stock Exchange, was the peak of the conflict between the two leading figures, that had rocked the capital market for about two weeks.

Also affected by the hammer from the regulatory body were other council members of the exchange whose appointments were voided by the court. The SEC, which is the apex regulator of the Nigerian capital market, completed the routing by dissolving the NSE's decision-making organ, its council, 'pending the outcome of ongoing litigations.'

Clearly, crises feed uncertainty.
Uncertainty affects behaviour negatively, which in turn worsens crises. This is even more profound in the fluctuating world of the capital market, which thrives on confidence. Trust, to the capital market is like oxygen.

It gives it sustainability. Since last year when the Nigerian Stock Exchange (NSE) witnessed a setback following the global financial meltdown and internal manipulations of stock prices, few issues have affected the public image and investors' confidence, as the current rift between Dangote and the sacked leadership of the NSE.

Dangote, who became the NSE President last year under a whiff of controversy, recently shocked the investing public with a string of allegations to the effect that the 50-year-old institution was bankrupt. He had, in a petition to the SEC, catalogued a series of claims that the NSE was insolvent.

The NSE swiftly denied the charges, and maintained that it remains strong, financially, and has not defaulted in any of its obligations, either to its staff or its other publics. But Dangote maintained that the stock exchange was bleeding in all corners of its balance sheet. For instance, he alleged that the NSE recently borrowed about N900 million from the Central Securities Clearing System (CSCS), one of its subsidiaries, to fund its operations.

He also claimed that the NSE had failed to pay its staff due perks and bonuses, and had been unable to hold its annual President's dinner. These, he alleged, are pointers that the books of the exchange are in the red. He, therefore, urged the SEC to probe all alleged irregularities, particularly as it relates to the accounts and books of the Stock Exchange.

We welcome the far-reaching actions taken by the SEC. It would, in fact, have done the capital market a lot of good if the regulatory authority had waded in earlier than now. Public interest is of great essence in the operation of the capital market and crisis, such as the personality tussle of the recent weeks, negatively affects the All Share Index of the capital market. This, clearly, was the case within the period that the rift between Dangote and the NSE lasted, as market indicators clearly showed a bearish run on stocks. Public interest should always override individual interests.

The SEC should now, as a matter of urgency, institute an independent probe into all allegations and claims made by the parties in the dispute. The outcome of the investigation should be made public. Considering the vital role of the Stock Exchange in the economy, the regulatory body should do a thorough cleansing of the market and ensure that only people of unquestionable integrity occupy its sensitive positions.

The Stock Exchange should, at all times, be guided by best practices. Sanitizing the market requires sincerity, pragmatism and transparency, among other things. Anything short of these will put investors' fortunes in peril, and the economy will be worse for it.