The Director-General of the Debt Management Office (DMO), Ms. Patience Oniha, announced the appointment of Stanbic IBTC as the Government Stockbroker due to its status as a comprehensive and diversified financial services provider.
During a web meeting held today in Abuja with officials from Stanbic IBTC, she discussed strategies to effectively fulfill the agency's mandate.
Ms. Oniha stated, “Stanbic IBTC is a comprehensive, full Financial House. The brand is both strong and respected and the reach is very wide. They are in the retail business, in the capital market and in the pension business.
She emphasized that the firm is well-known and highly regarded among their client base and prospective investors, aligning perfectly with the DMO's objectives.
“Its share reputation, diversification as a group, and the fact that they have been in this role before. All of these qualified the organization for the appointment as a Government Stockbroker,” she added.
The Director-General further explained that the DMO's decision to appoint a Government Stockbroker is aimed at enhancing the capital market, particularly the secondary market, and increasing awareness among retail investors regarding available opportunities.
She explained that their organization collaborates closely with the federal government, issuing securities on its behalf. By appointing Stanbic IBTC as their stock broker, they are acting in the interests of the federal government. There are two primary reasons for the Debt Management Office (DMO) to engage a stock broker.
Firstly, they are the largest issuers of securities in the market, and they have a substantial presence in the fixed income sector, where they nearly dominate.
Additionally, it is important to highlight their efforts to cultivate the retail segment, particularly through initiatives like the Savings Bond and Sukuk. This segment holds significance for them, alongside the FGN Bonds market, which primarily caters to larger investors.
She also emphasized that the primary reason for engaging a government stock broker is to ensure compliance with the Nigerian Exchange Group, which mandates that we have a stock broker with clearly defined responsibilities.
As participants in the market, adherence to market regulations is essential.
Stanbic IBTC fulfills all necessary criteria, being a registered stock broker with the Securities and Exchange Commission (SEC) as well as the Nigerian Exchange Group.
Additionally, the DMO is dedicated to enhancing the domestic capital market.
"We did quite a lot with wholesale investors, and that has helped us to achieve diversification in the investor group for our FGN Bonds, and the Sukuk because previously, it was the banks mainly but that group is very well diversified.
“But we realized that there are the smaller groups who may not have the kind of money that the big players have. We know they can invest in entities, but giving them fixed income securities is also one option.
“For that segment, we need to be able to make them aware of the products, particularly those targeted at them, the FGN Savings Bond, and also create a secondary market for them.
“So those bonds are issued for short tenors and they can’t hold foe a long time as a pension fund, or insurance companies would, but they also need to be able to buy and sell whenever they want to. That segment is the other reason we have appointed a government stock broker.
“As you know, most of the trading in the wholesale segment takes place on FMDQ, but on the exchange is where really the retail investors who have been used to equities anyway, can participate,” she said.
Ms. Oniha mentioned that the main job of the stockbroker, besides making sure the DMO meets all the Nigerian exchange group’s requirements, is to bring in more investors for FGN securities, specifically the FGN Savings Bond and Sukuk.
She pointed out that some brokers still need to get a better grasp of how these securities work so they can effectively inform their clients through awareness workshops.
Oniha noted that the DMO has made significant progress by starting the process of selecting a government stockbroker with a broader role, but there’s still a lot to do based on discussions with other institutions and retail investors.
She expressed confidence in the DMO’s partnership with Stanbic IBTC to reach these goals and mentioned that the DMO would be looking to Stanbic IBTC for guidance along the way. The Director-General clarified that the appointment would last for three years, in line with procurement regulations.