Olumide Lala of THE Nigerian STOCK EXCHANGE shares their plan to upgrade their trading system and adopt FIX for trading.
Nothing has a greater impact on the future of organizations than the ability to harness technology. As a result of the increase in the application of technology to market processes, there is today a shift from trading floors to screenbased systems. Electronic trading platforms are increasingly in direct competition with traditional exchanges, amongst other associated developments. Electronic trading, long established and used by the leading stock exchanges, is now the norm across much of the developing world. Although the leading African exchanges, notably the Johannesburg Stock Exchange (JSE, South Africa), Cairo-Alexandria (Egypt), Casablanca (Morocco) and THE Nigerian STOCK EXCHANGE (NSE, Lagos), made the switch over ten years ago, the rest of Africa has been slow to catch up.
Increased Electronic Trading
The gap between the trading technologies used by developed, emerging and frontier markets has been contracting rapidly over the last two to three years. Africa’s more peripheral stock exchanges have sought to modernize, largely in response to the interest shown in frontier markets by international investors.
During the 13th annual Conference of the African Securities Exchange Association (ASEA) in Nigeria in 2010, the ASEA identified Africa’s generally positive growth prospects as an opportunity to attract increased foreign investment at a time when growth prospects remain negative or flat elsewhere. For the host nation, the technology roadmap has been a positive one, with the recent change in management, there has been a major drive in transforming the exchange with respect to the business model and technology framework.
Growth in the Nigerian Capital Market
The recent growth witnessed in the Nigerian capital market can be attributed to the introduction of remote trading or Electronic Communications Networks (ECN) in 2005. This system enabled brokers to trade in the comfort of their offices without having to come to the trading floor. To date, there are 235 remote trading connections in Lagos besides those deployed in branches across the country. In addition, there are an increasing number of dealing member firms accessing the exchange system remotely.
The ongoing transformation with respect to technology initiatives is one of the major driving forces behind the development of the Nigerian capital market. The long term vision is to make Nigeria’s capital market one of the largest 20 economies in the world by 2020. The Financial System Strategy 2020 blueprint will be used to achieve these goals: developing and transforming Nigeria’s financial sector into a growth catalyst and engineering Nigeria’s evolution into an international financial centre.
