2018 Exchange Traded Products Conference
Welcome Address by Mr. Oscar N. Onyema, OON
Chief Executive Officer, The Nigerian Stock Exchange December 5th, 2018
Good morning distinguished ladies and gentlemen:
On behalf of the council and management of The Nigerian Stock Exchange (NSE), it gives me utmost pleasure to welcome you to the annual ETPs Conference tagged “Exchange Traded Products: Evolving investment themes, Accessing New Markets and Enhancing Portfolio Alpha”. We are indeed pleased to host this event, the fourth in a series of expository discussions and strategic dialogue on the development of the ETPs market in Nigeria.
ETPs are one of the most significant financial innovations in recent decades and have shaped the financial markets. Since the introduction of ETPs in 1993, they have gained widespread acceptance in most developed markets. Over the last 15 years, investors’ demand for ETPs (both retail and institutional) has grown remarkably, which in turn has led to a greater variety of products offered by ETP sponsors.
Globally, ETPs have grown remarkably this year recording net flows of approximately $358bn as at October 2018. According to ETFGI, the Global ETP industry had close to 15,000 ETPs listings on 71 exchanges with assets of about US$5tn cutting across 392 providers at the end of October 2018.
It is interesting to note that equity-based ETPs make up 76.7% of global ETP listings whilst Fixed Income based ETPs represent 16.7% of listings, similar to the asset split in Nigeria.
The cross-listing of ABSA’s Newgold ETF on the Nigerian Stock Exchange in December 2011, opened up the ETPs market. Since then, the ETPs space has grown steadily by a cumulative average growth rate of 8% over the last 4 years. Currently, there are 9 ETPs listed on the Exchange – 2 thematic ETFs providing access to Pension-compliant and Shariah-compliant stocks, 2 broad equity market ETFs tracking the NSE 30 Index, 3 sector based ETFs, 1 commodity ETF, and 1 bond ETF tracking exposure to benchmark FGN Sovereign Bonds.
The introduction of ETPs is one of the Exchange’s strategy to enhance diversification as well as broaden the options available in the capital market to support the efficient implementation of investment strategies across diverse asset classes and instruments.
I would like to use this medium to encourage ETP product issuers and intermediaries to expand their footprint by broadening distribution channels, introducing other asset classes/strategies, entering new markets, leveraging technology and data analytics to understand the market and demand. This year, in collaboration with issuers, we have focused on diversifying the ETPs space by supporting new product development and thus expect the launch of new ETPs in the short term.
Today, we are gathered to expand the discourse on ETPs in terms of enhancing domestic capacity as well as improving collaboration amongst participants in the ecosystem – product strategists, issuers, intermediaries, advisers, investment managers and investors.
This conference is aimed at providing insights on emerging themes as well as foster understanding of ETPs as convenient vehicles and investment management tools for accessing other markets.
Discussions at this conference will amongst other things;
· Seek to identify solutions to challenges in the domestic market, as well as consider the potential for cross border listing of securities in Africa;
· Expand the dialogue regarding the integration of African Financial Markets via the issuance of ETP vehicles and Depository receipts;
· Provide the investment advisory and broker-dealer community with an understanding of their roles in distribution and capital mobilization, as well as
· Provide direction to ETP Issuers to support product development efforts in the medium term.
Leading today’s all-important conversations are two of the most recognized ETF strategists out of Europe and Africa – Ms. Debbie Fuhr and Mrs. Nerina Visser as well as a carefully selected panel of thought leaders across Africa’s investment management industry. I thank our speakers for their support and valuable perspectives and all our distinguished guests for making time to be here.
Let me conclude by expressing our gratitude to our sponsors – ABSA, Meristem Wealth Management, Stanbic IBTC Asset Management, Vetiva Capital Management, Afrinvest Asset Management, Lotus Capital and the Fund Manager’s Association of Nigeria (FMAN) for their kind contributions to this event as well as their unwavering support and commitment to the growth of the ETP segment of our market.
I trust that this conference will provide in-depth coverage of the various benefits of ETPs as well as address trends in the global and domestic ETPs space in terms of adoption, disruption and evolving investment strategies. I urge us to participate actively and look forward to fruitful discussions.
Oscar N. Onyema, OON
Chief Executive Officer