In a move to prevent a relapse to the 2008 stock market downturn, the Securities and Exchange Commission (SEC) has approved 32 securities that can be used as collateral for margin loans.
The approved 32 securities contained in the Margin List released by the regulatory authorities on Friday, however, excludes banks’ stocks from being used as collateral for margin transactions, but allowed other stocks in the market to be used in margin trade on the equities market.
The SEC and Central Bank of Nigeria (CBN) had earlier introduced a set of rules to regulate margin lending following the realisation that unsupervised use of margins to fund investment in listed equities contributed to the share price crash in 2008.
Unveiling the list of securities that could be used for margin loan facilities, SEC said the list was not an investment recommendation, but rather a guide to those who wished to engage in margin activities. The approved 32 securities include: Ashaka Cement Plc; Cadbury Nigeria Plc; Conoil Nigeria Plc; Custodian and Allied Insurance Plc; Dangote Cement Plc; Dangote Flour Mills Plc; Dangote Sugar Refinery Plc; Fidson Healthcare Plc; Flour Mills Nigeria Plc; Glaxo Smithkline Consumer Plc; Guinness Nigeria Plc; Honeywell Flour Mill Plc; International Breweries Plc; Julius Berger Plc.
Others are: Lafarge Cement WAPCO Nigeria Plc; Livestock Feeds Plc; Mansard Insurance Plc; Mobil Oil Nigeria Plc; National Salt Company Nigeria Plc; Nestle Nigeria Plc; Nigerian Aviation Handling Plc; Nigerian Breweries Plc; Oando Plc; Okomu Oil Palm Plc; P Z Cussons Nigeria Plc; Presco Plc; Seven-up Bottling Company Plc; Total Nigeria Plc; Trans National Corporation Plc; UACN Property Development Plc; Unilever Nigeria Plc; and UAC of Nigeria Plc. In a statement to the market community, the SEC head of media, Mr. Yakubu Olaleye, said SEC recognised the need to remedy the situation and chart a new course founded on the principles of risk-based supervision.
SEC advised investors to check the Margin List before entering into a margin lending arrangement with a broker or a bank, warning that only persons and entities who are knowledgeable about margin activities should engage in such transactions.