2019 Annual Report - Final Version

UNLOCKING
OPPORTUNITIES

IN A CHANGING WORLD

RANEPNOURATL1290

[email protected]
www.nse.com.ng

TABLE OF CONTENTS

Pg. 2 Content
Pg. 3 Our Vision and Mission Statement
Pg. 4 Notice of the 59th Annual General Meeting
Pg. 8 Explanatory Notes to the Proposed Resolutions (under Special Business)
Pg. 12 President's Statement
Pg. 17 CEO's Statement
Pg. 22 Strategy Report
Pg. 35 2019 Highlights
Pg. 37 Enterprise Risk Management Report
Pg. 47 Ethics and Compliance

Pg. 53 Special Feature on Growth Board
Report on National Council Evaluation
Pg. 57 Corporate Governance Report
Pg. 59 The National Council
Pg. 75 Profile of Members of the National Council
Pg. 77 Report of the National Council
Pg. 84 Council Members' Responsibility in Relation to the Financial Statement
Pg. 89 Independent Auditors' Report
Pg. 92 Consolidated and Separate Statement of profit or loss
Pg. 95 Consolidated and Separate Statement of Financial Position (SOFP)
Pg. 97 Consolidated and Separate Statement of Changes in Equity (SOCIE)
Pg. 99 Consolidated and Separate Statement of Cash Flows (SOCF)
Pg. 101 Notes to the Consolidated and Separate Financial Statements
Pg. 103 Value Added Statement
Pg. 180 Financial Summary
Pg. 182

Pg. 187 Complaints Management
Pg. 190 Comparative Trading Activities
Pg. 193 Summary of Trading Activities by Category
Pg. 202 All Share Index
Pg. 204 Monthly Trading Activities Value 2019
Pg. 206 Summary of Trading Activities January to December 2019
Pg. 208 Growth in Listed Securities
Pg. 211 Active Dealing Members as of 31 December 2019

Pg. 217 Management Team
Pg. 221 Flash of our Events
Pg. 232 Presidents of The Exchange
Pg. 235 Proxy Form

[email protected] The Nigerian Stock Exchange
www.nse.com.ng Stock Exchange House
2-4 Customs Street
Lagos, Nigeria
Tel: +234 700 225 5673

THE NSE VISION

Africa's Preferred
Exchange Hub

THE NSE MISSION

To provide investors
and businesses
a reliable, efficient
and an adaptable
exchange hub in
Africa, to save and
to access capital

Page 3 [email protected]
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Notice of the Fifty-Ninth Annual
General Meeting

NOTICE IS HEREBY GIVEN that the Fifty-Ninth Annual General Meeting of Members of the Nigerian Stock
Exchange (“The Exchange”) will be held at the NSE Event Centre, 20th floor, Stock Exchange House, 2/4
Customs Street Lagos, on 18th November 2020 at 11:00 a.m. prompt to transact the following
businesses:

ORDINARY BUSINESS
1. To present the Audited Financial Statements of The Exchange for the year ended 31 December 2019,

and the Reports of the National Council and the Auditors thereon.

2. To re-elect the following Council Member, who is retiring by rotation, as a Member of the National
Council:
i. Otunba Abimbola Ogunbanjo

3. To authorize the National Council to fix the remuneration of the Auditors.

SPECIAL BUSINESSES:

1. To consider and if thought fit, pass as a special resolution (with or without any modifications), that

the underlisted being members of the National Council be and are hereby empowered to continue to

serve as Council members and the governance structure of The Nigerian Stock Exchange be

maintained until the Securities and Exchange Commission (SEC)’s approval to operate as a

demutualized exchange is obtained and the securities exchange license of The Exchange is

transferred to Nigerian Exchange Limited; and as such Articles 4(1) and (2) and 5(1)(v)(vi) and (viii) of

the Nigerian Stock Exchange’s 2006 Memorandum and Articles of Association, not being consistent

with the foregoing , be and are hereby suspended. The said Council members and their designations

are as follows:

i. Otunba Abimbola Ogunbanjo - Council President

ii. Mr. Oscar N. Onyema, OON - Chief Executive Officer

iii. Mr. Aigboje Aig-Imoukhuede, CON - Ex-Officio

iv. Mr. Abubakar Mahmoud, SAN, OON - 1st Vice President

v. Mrs. Catherine Nwakaego Echeozo - 2nd Vice President

vi. Erelu Angela Adebayo - Ordinary Member

vii. Katsina State Investment & Property Development Co. Limited - Ordinary Member

(Represented by Mrs. Fatimah Bintah Bello–Ismail) (Institutional)

viii. Chartwell Securities Limited (Represented by Mr. Oluwole Adeosun) - Dealing Member

ix. Equity Capital Solutions Limited - Dealing Member

(Represented by Mr. Kamarudeen Oladosu)

x. Fortress Capital Limited (Represented by Mr. Yomi Adeyemi) - Dealing Member

xi. Pilot Securities Limited (Represented by Mr. Seyi Osunkeye) - Dealing Member

xii. Planet Capital Limited (Represented by Mr. Chidi Agbapu) - Dealing Member

xiii. WCM Capital Ltd. (Represented by Mr. Patrick Ajayi) - Dealing Member

2. To consider and if thought fit, pass as a conversion and re-registration of The
special resolution (with or without any Exchange as Nigerian Exchange Group
modifications), that subject to the receipt Plc, the Nigerian Exchange Group Plc be
of requisite approvals of relevant and is hereby authorised to undertake a
regulatory authorities, following the listing by introduction of its shares on

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Nigerian Exchange Limited (the entity to representative of a member, save
which the securities license of The that a corporation being a member of
Nigerian Stock Exchange would be The Exchange may appoint as its
transferred), through the listing of proxy one of its Directors or other
[2,004,199,917] ordinary shares of 0.50k authorized representative who is not
each in the issued share capital of The a member of The Exchange.
Exchange.
b) The Common Seal must be affixed on
3. To consider and if thought fit, pass as a the proxy form if executed by a
special resolution (with or without any company.
modifications), that the National Council
of The Exchange be and are hereby c) Executed proxy forms should be
authorised to appoint such professional deposited at either the registered office
parties and undertake such other acts, of The Exchange’s Registrars,
matters, deeds and do all such other Datamax Registrars, (92C, Gbagada -
things as it may deem necessary, Oworonshoki Expressway, Gbagada,
incidental to and/ or required for effecting Lagos) or via email to
the resolutions above, and to negotiate, [email protected] or
finalise and execute such deeds, [email protected] at least 48
documents and agreements as may be hours before the time of holding the
deemed necessary, desirable or proper in meeting. A blank proxy form is
the best interest of The Exchange to attached to the Annual Report and may
implement the resolutions set out above. also be downloaded from The
Exchange’s website at
4. To consider and if thought fit, pass as a www.nse.com.ng.
special resolution (with or without any
modifications), that all acts carried out by 2. PROVISIONS OF ARTICLES 4 (1), 4(2)
the National Council and/or Management AND 5(1)(V), (VI) AND (VIII) OF THE
of The Exchange in connection with the NIGERIAN STOCK EXCHANGE’S 2006
above resolutions be and are hereby MEMORANDUM AND ARTICLES OF
approved and ratified. ASSOCIATION
4 (1) The Council shall after each Annual
5. To consider and if thought fit, pass as a General Meeting elect by ballot, one of
special resolution (with or without any their members being an individual
modifications), that following the Nigerian Member of The Exchange as
conversion and re-registration of The President and any two other individual
Exchange as Nigerian Exchange Group Nigerian Members as Vice-presidents
Plc, all or any of the powers of The who shall bear the titles of President,
Exchange devolved upon the National First Vice-President and Second Vice-
Council of The Exchange may be President respectively of The
exercised by its Board of Directors. Exchange. Provided that the President
and anyone of the Vice Presidents shall
NOTE: not be members of the same Branch
1. PROXY Exchange. Where within a period of
fifteen minutes after the period fixed for
a) A member entitled to attend and vote a meeting either of Council or of
at the Annual-General Meeting is Members, the President not being
entitled to appoint a proxy to attend present, any of the Vice-Presidents, or
and vote instead of himself/herself. failing them, any elected member of the
No person shall be appointed a proxy Council shall preside at the meeting.
who is not already a member of The 4 (2) TERMS OF OFFICE
Exchange or the accredited
[email protected]
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The President and Vice-presidents 4. ATTENDANCE BY PROXY
shall hold office from the date of In line with CAC Guidelines, attendance at
election till the next Council meeting the AGM shall be by proxy only. Members
following an Annual General Meeting of are required to appoint a proxy of their
Members. A retiring President or Vice choice from the list of nominated proxies
President shall be eligible for re- below:
election provided that no person shall a. Otunba Abimbola Ogunbanjo
be elected for more than three terms of b. Mrs. Catherine Echeozo
one year. c. Mr. Oluwole Adeosun
The President or any of the Vice- d. Chief Patrick Ezeagu
Presidents may be removed from e. Mr. Sam Ndata
office by a resolution carried by an
absolute majority of the membership 5. STAMPING OF PROXY
of the Council at a duly constituted The Exchange shall make arrangements
meeting thereof and any other Member at its cost for the stamping of the duly
elected in his place”. completed and signed proxy forms
submitted to The Exchange’s Registrars
5 (1)(V) Two (2) members representing within the stipulated time.
Institutional Investors approved by the
Council each with three (3) years 6. LIVE STREAMING OF AGM
tenure in the National Council. The AGM will be streamed live to enable
members and other stakeholders who are
5 (1)(VI) One (1) member representing unable to physically attend to follow the
Quoted Companies with three elected proceedings online. The link for live
by Council (3) years tenure in the streaming is as follows:
National Council. http://www.nse.com.ng/agm.

5 (1)(VIII) Six (6) persons representing Dated this 27th day of October 2020
Dealing Member firms; each with three
(3) years tenure in the National Council By Order of Council
and protection of the interest of The
Nigerian Stock Exchange. Mojisola Adeola
Council Secretary
3. COVID-19 RELATED DIRECTIVES AND Stock Exchange House
GUIDELINES 2/4 Customs Street
The convening and proceedings at the Lagos, Nigeria
AGM shall be conducted in compliance
with all directives and guidelines issued
(by the Federal Government of Nigeria,
Lagos State Government, Health
Authorities and Regulatory Agencies) to
curb the spread of COVID-19 in Nigeria. In
particular, the directives of the Lagos
State Government that: (a) participants at
any event should not exceed 50% capacity
of the design of the event centre; and (b) a
minimum of two-metre spacing between
seats should be maintained at all times,
would be strictly complied with. Further,
the guidelines issued by the Corporate
Affairs Commission (CAC) on holding of
AGM of Companies using Proxies shall be
complied with.

Page 6 [email protected]
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Explanatory Notes to the Proposed
Resolutions (under Special Business) on the
agenda for the 59th Annual General Meeting
of The Nigerian Stock Exchange scheduled
for 18th November 2020

The National Council considers the proposed also held on the same day, Members
resolutions presented for Members’ authorized the appointment of the
consideration and voting are in the best inaugural directors of the Board of
interests of the Nigerian Stock Exchange, and Nigerian Exchange Group Plc as well as
its Members as a whole. Therefore, the National directors of its subsidiaries (“SubCos”)
Council unanimously recommends that who would direct the affairs of these
Members should vote in favour of these entities once the relevant approvals for the
resolutions. transfer of the securities license and other
milestones in the demutualization
Resolution 1 – Suspension of Articles process have been completed. The
4(1) and (2) and 5(1)(v)(vi) and (viii) of the demutualization process has advanced
Nigerian Stock Exchange’s 2006 significantly and is expected to be
Memorandum and Articles of completed shortly.
Association for continuity of the National
Council, as currently composed, till the 1.4 If passed, the afore-mentioned Special
completion of the Demutualization of the resolution will serve to empower the
Nigerian Stock Exchange National Council, as currently composed,
to continue to act after the Nigerian Stock
1.1 Under this Agenda item, it is proposed Exchange’s conversion to a Plc; up to and
that Members authorize the National during the process of filing the Application
Council, as currently constituted, to to the SEC for: (i) the approval of the
continue to function in office from the date securities exchange (i.e. Nigerian
of the general meeting pending receipt of Exchange Limited) and the transfer of the
the Securities and Exchange Nigerian Stock Exchange’s securities
Commission’s (SEC)approval for the license to Nigerian Exchange Limited; and
transfer of the Nigerian Stock Exchange’s (ii) issuance of the license to NGX
securities license to Nigerian Exchange Regulation Limited until the SEC’s
Limited. approval is received.

1.2 Members will note that at the Court 1.5 The authorization by Members will ensure
Ordered Meeting of Members held on 3 that at no point is there a lacuna in the
March 2020, Members approved the governance of the Nigerian Stock
proposed Scheme of Arrangement (the Exchange in view of the critical role it plays
“Scheme”) between the Nigerian Stock in the smooth functioning of Nigeria’s
Exchange and its Members and voted capital market. Upon receipt of the SEC’s
overwhelmingly in favour of all the approval for the transfer of the Nigerian
resolutions proposed thereat. Stock Exchange’s securities license to the
Nigerian Exchange Limited, effectively
1.3 At the Extra-Ordinary General meeting signifying the completion of the

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demutualization process, the National the objectives of the Nigerian Stock
Council will be deemed dissolved and the Exchange, which includes creating value
inaugural board of Nigerian Exchange for its Members in a transparent and
Group Plc and its SubCos will be efficient manner.
immediately constituted as approved
1.9 These resolutions require Members to
1.6 It is proposed that Members give effect to authorize:
the foregoing resolution by approving the i. the Nigerian Exchange Group Plc. to
suspension of Articles 4(1) and (2), and undertake a listing by introduction of
5(1)(v)(vi) and (viii) of the Nigerian Stock its shares on Nigerian Exchange
Exchange’s 2006 Memorandum and Limited (the entity to which the
Articles of Association, which are securities license of The Nigerian
inconsistent with the approvals being Stock Exchange would be
sought. transferred), through the listing of
[2,004,199,917] ordinary shares of
1.7 Resolution 1 being a special resolution 0.50k each in the issued share capital
must receive, at least three-quarters of the of Nigerian Exchange Group Plc; and
votes of Members present and voting (in
person or by proxy) at the Annual General ii. the National Council to appoint such
Meeting for its adoption/passing. professional parties and undertake
such other acts, matters, deeds and
Resolutions 2 and 3 – Authorization of do all such other things as it may
the Nigerian Exchange Group Plc. to deem necessary, incidental to and/ or
undertake a Listing by Introduction of required for effecting the resolution to
its Shares on Nigerian Exchange list, and to negotiate, finalise and
Limited post-demutualization. execute such deeds, documents and
agreements as may be deemed
1.8 The purpose of these Special resolutions necessary, desirable or proper in the
is to provide value for Members by best interest of The Exchange to
creating a mechanism for them to implement the resolution to list.
access liquidity post-demutualization.
Please recall that the Council of the 1.10 R e s o l u t i o n s 2 a n d 3 a r e S p e c i a l
Nigerian Stock Exchange had informed resolutions, therefore at least three
Members that one of the elements of the quarters of the votes of Members
Scheme is that Members can realize the present and voting (in person or by
economic value of their interests if they proxy) at the Annual General Meeting
elect to sell. An initial public offer (IPO) or must be in favour of the resolution for
strategic investment would provide their adoption/passing.
opportunities for domestic and
institutional investors and create liquidity Resolutions 4 and 5 – Omnibus or
for existing Members. Given that there Savings Resolutions to ensure that
shall be an interim period between actions carried out by Management, the
completion of the demutualization and National Council of the Nigerian Stock
when the IPO or strategic investment is Exchange and the Board of Nigerian
undertaken, the National Council sought Exchange Group Plc., are valid and
independent professional advice enforceable.
regarding the pre-initial public offer
liquidity options and considerations. The 1.11 The purpose of the foregoing resolutions
National Council has been duly advised is to ensure that actions taken by, under or
that resolutions 2 and 3 are in the best through the current governance structure
interests of its Members, and supports are properly transmitted to the

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succeeding governance structure in a ii. all acts carried out by the National
seamless manner to ensure that steps Council and/or Management of The
can be validly taken in furtherance of these Exchange in connection with the above
resolutions. They are to enable resolutions.
Management, the National Council or the
Board of Nigerian Exchange Group Plc., iii. that following the conversion and re-
(as may be appropriate) take all necessary registration of The Exchange as
actions or steps required to give effect to Nigerian Exchange Group Plc, all or any
resolutions 1 to 3, (pre or of the powers of The Exchange
postdemutualization), provided that these devolved upon the National Council of
resolutions 1 to 3 are approved by The Exchange may be exercised by its
Members. Board of Directors.

1.12 These resolutions require Members to 1.13 R e s o l u t i o n 4 a n d 5 a r e S p e c i a l
authorize: resolutions, therefore at least three-
i. the National Council or the Board of quarters of the votes of Members present
Directors of Nigerian Exchange Group and voting (in person or by proxy) at the
Plc (as may be appropriate), to take Annual General Meeting must be in favour
other steps or do all such other things of these resolutions for their
as may be necessary for or incidental adoption/passing.
to, or as they deem appropriate to give
effect to the spirit and intendments of
the above resolutions.

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President’s Statement

‘‘I will speak more on our dynamic efforts
regarding demutualization shortly, as well
as highlight salient aspects of our strategic
performance during the year’’

Distinguished ladies and gentlemen, regarding demutualization shortly, as well as
highlight salient aspects of our strategic
I am pleased to welcome you to the 59th Annual performance during the year. Allow me to first
General Meeting of Nigerian Stock Exchange start by providing an overview of the operating
(NSE or The Exchange) in my 3rd year as the environment we faced in 2019.
National Council President, and it gives me
immense pleasure to present to you our Annual The Global Economic Landscape
Report for the year ended 31 December, 2019. The global economy was continually impacted
This year in particular was quite unique for our by global trade tensions, uncertainties around
business as it marks the beginning of a pivotal Brexit, waning fiscal stimulus in Europe and
transitional phase for the NSE on the back of geopolitical challenges in the Middle East,
continued progress on our audacious strategic which exerted downward pressure on global
ambition to demutualize the organization; a economic performance. Nonetheless, the
reality that continues to crystalize by the day. I world’s leading economy, the United States,
can assure you that as we restructure the experienced robust capital market
business to a more nimble and client focused performance despite lower GDP performance,
entity, our demutualization efforts are essential driven by favourable fiscal policy (i.e. tax cuts)
to how we will compete in the future, in addition and monetary policy (i.e. lower U.S. Federal
to how we will grow Nigeria’s global financial Reserve rate).
markets. On the domestic front, investors and market
operators contended with new economic
I will speak more on our dynamic efforts realities in Nigeria, as our capital markets

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President’s Statement normal operations in the securities business, as
well as other subsidiaries aimed at enhancing
proved it was not isolated from events affecting Nigeria’s global capital market. In line with our
global financial markets and economies. The Vision of becoming Africa’s Preferred Exchange
Nigerian economy grew at a somber rate of Hub, the National Council in its pledge to assist
2.27% in 2019, as our economy experienced the business to have a seamless transition to a
condensed private consumption, accompanied more agile organization, together with
by investors’ wait-and-see approach towards Management, engaged the services of an
economic and capital market investments. international consulting firm to refine our 3-
Accordingly, the Nigerian macro-economic year corporate strategy post demutualisation.
environment, and prevailing market conditions, We will continue to update and sensitize the
had a great influence on Nigeria’s leading market on various plans and opportunities as
bourse, as the NSE All Share Index (ASI or All we strive to enhance the value of the Group and
Share Index) shed 14.60% points to close the its stakeholders.
year at 26,842.07. Despite these challenges,
we advanced our strategy implementation and We continued to fulfill our mission to provide
recorded sustainable financial performance in investors and issuers with a reliable and
key financial indices – our revenue and other adaptable exchange hub to save and access
income for the year was relatively at par inching capital by making significant progress in our
up slightly by 1.46% to N7.78Bn, total assets efforts to establish the first Exchange Traded
grew by 10.42% to N32.10Bn, while net assets Derivatives (ETDs) market in West Africa, which
increased by 9.73% to N28.44Bn. The growth in would help investors manage their exposure to
these indices were driven by a rise in listing risk in the capital market. We received the SEC
income buoyed by groundbreaking primary approval for the NSE ETD rule book which will
market listings in the telecommunications and facilitate desired confidence in the derivatives
aviation sectors, in addition to favourable market. In similar vein, the SEC released their
returns on strategic investments. Derivatives Trading and Clearing rules. We are
also collaborating with JPMorgan Chase & Co.
We remained diligently focused on the to facilitate in-depth capacity building
execution of the NSE’s 2018 – 2021 Corporate programmes on the derivatives market. These
strategy geared towards (a) enhancing the types of collaborations will help to promote the
customer experience across the value chain, (b) development of derivatives in Nigeria by
reorganizing for success and (c) capitalizing on bridging the knowledge gap on derivatives
mission critical strategic initiatives. As instruments and trading strategies through
aforementioned, we made significant progress knowledge transfer. We will continue our
in our demutualization journey as we received widespread sensitization efforts to enhance
the Securities and Exchange Commission’s prospective participants’ capacity and
(SEC) “No Objection” letter and are optimistic of awareness as we work assiduously towards
completing the entire demutualization process the official launch of ETDs.
in 2020. As the NSE completes its
demutualization, The Exchange will speedily As part of our response to emerging trends and
transform into a profit seeking entity that is global best practices, we made significant
well-positioned to capitalise on new income efforts towards the launch of the NSE Growth
opportunities and be able to better support the Board which will serve as a market segment for
economic growth of Nigeria. Upon completion entrepreneurs and SMEs to raise much needed
of the demutualisation, and the re-registration capital to grow their businesses. We are
of The Exchange, a non-operating holding currently engaging with stakeholders and
company named Nigerian Exchange Group Plc investors towards the launch of this market
(the “Group”) will emerge, with ownership of
Nigerian Exchange Limited, which will continue [email protected]
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President’s Statement their relevant domestic ecosystem, highlighting
our efforts to leverage global best practices and
segment which we expect to take place in the forge mutually beneficial relationships with
first quarter of 2020. leading global exchanges, which will prove
crucial as we transit to a demutualized
Strengthening Partnerships exchange. We also collaborated with Afrinvest,
The Exchange services Africa’s largest Greenwich, Meristem, Luxembourg Stock
economy and is a significant driver of economic Exchange, etc. to create value added services
growth and development in Africa. We would be and products for all our domestic and
unequivocally at a disadvantage in achieving international stakeholders. Our Chief Executive
our mandate without the support of various Officer’s statement will shed more light on
organizations who continually partner with us. I progress made with our strategic partnerships.
want to personally thank all of our clients and
stakeholders, not only for their support, but also Sustainable Governance
for their collaboration efforts in building an even At The Exchange, we take sustainability in
stronger capital market. governance not only as the primary
responsibility to our various class of
During the year, we continued to identify and stakeholders, but as the crux of our
partake in various mutually beneficial organizational mantra. Over the last few years,
collaborations with stakeholders. In we have worked relentlessly to ensure a robust
collaboration with the SEC, we made the Group-wide governance structure that
process of listing on The Exchange more incorporates Best-in-Class global standards
efficient and cost-effective by streamlining the that promotes the highest levels of corporate
approval process between the SEC and the governance practices. This has resulted in
NSE. The streamlined process will reduce the (I) a stronger exchange with internationally
regulatory burden on issuers by eliminating
duplication of processes between the SEC and recognized regulatory practices,
the NSE, reducing the time-to-market for the (ii) stronger intermediaries via our zero
issuance and listing of securities, and ultimately
assisting in the drive to list more organizations tolerance approach to regulation, and
on The Exchange. (iii) a sustainable culture that supports

In line with The Exchange’s objective to The Exchange’s corporate aspirations.
accelerate progress towards bridging gender
parity, we organized a symposium themed Today, the NSE operates various policies
“Balance for Better” during the International geared at ensuring sustainability of the
Women’s Day (IWD) celebration in partnership organization including conflict of interest,
with International Finance Corporation (IFC), succession planning as well as training and
UN Women, United Nation Global Compact capacity development of National Council
(UNGC), World Federation of Exchanges (WFE) members as evident in our technical tours.
and Sustainable Stock Exchange Initiative Notwithstanding that we are yet to be a legally
(SSEI). As part of our core values as an demutualized entity, I can confidently state that,
organization, we will continue to promote for the most part, the NSE already upholds
inclusiveness and support programmes where controls which reflects the highest levels of
this value is upheld. sustainable good governance. We have a well
formed National Council that represents
The National Council organized an in-depth diverse experience, balanced gender and age
technical tour of a leading BRICS nation’s global groups as obtainable in advanced markets
financial market in 2019, vis-à-vis Brazil’s B3 around the world. To state the least, I am elated
Stock Exchange (Brasil Bolsa Balcão S.A.) and by the performance of our National Council
committees and their commitment to high
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President’s Statement process which had started 20 years ago. It is on
this solid foundation that I commenced my
standards in The Exchange’s governance tenure as President and continued the good
processes. We will continue to lead the way in work he started. It goes without saying that
terms of ensuring adequate process controls, without his leadership and guidance, The NSE
financial diligence and transparency in our would not have made it this far in its quest to be
transition. the African Exchange of choice . Thank you very
much for your genuine and sincere
As we continue to migrate to a demutualized commitment to excellence in the execution of
entity, the composition of our board will change The Exchange’s goals and ideals. .
to reflect the needs of a more translucent
institution comprised of a Holding Company With regards to Management, we welcomed
(HoldCo) and various complimentary two new senior team members into the
subsidiaries with members of the current Executive Management of The Exchange: Mr.
National Council transitioning to the board of Jude Chiemeka – Head of Trading Business
the HoldCo and the subsidiaries to maintain Division, and Mr. Olumide Bolumole – Head of
market stability and institutional knowledge. Listing Business Division. Since joining The
We will also identify and onboard well qualified Exchange, they have worked purposefully to lay
and suited board members with proven track the right foundation towards the attainment of
records who share our passion for our bold new corporate Vision.
transforming Nigeria’s global financial markets.
My immediate predecessor in office and Ex- Corporate Social Responsibility
Officio, Mr. Aigboje Aig-Imoukhuede will As a global organization, we understand that
however be retiring from the Council at this our responsibility goes beyond facilitating
meeting having served the stipulated term in Africa’s financial growth, as we essentially
office. During his tenure as President of the empower Africa’s corporate giants, sovereign
National Council, The Exchange became more Issuers and all classes of investors in creating
visible globally and transcended to a beacon of sustainable long-term value. Our Corporate
regulation and governance amongst its African Social Responsibility (CSR) initiative was
peers as it became the first African securities developed to ensure that we contribute actively
exchange to join the Intermarket Surveillance towards Environmental, Social and Governance
Group (ISG) and also the first African bourse to (ESG) imperatives. The NSE implements key
receive the ISO27001:2013 certification. It was initiatives across four strategic pillars namely
also under his tenure that the NSE officially (i) Marketplace;
became a full member in the World Federation (ii) Workplace;
of Exchanges (WFE), after being an associated (iii) Community; and
member for over fourteen (14) years. The NSE (iv) Environment.
made giant strides to become a more agile
organisation during the Ex-Officio’s tenure as During the year, we held the annual edition of
President, as our world renowned Premium corporate challenge which is geared towards
Board was launched with leading African raising awareness and funds to support cancer
Champion companies who promote best-in- causes and charity. Since the start of this
class corporate governance; the Premium initiative, we have raised over (a record)
Board index continually outperforms other N93million as at 31 December 2019 and
leading NSE indexes. Right from the inception introduced free cancer screening for 254
of his leadership of the Council, Mr. Aig- individuals. We launched the Facts Behind the
Imoukhuede stated his commitment to Sustainability Report (FBSR) to promote ESG
disentangle the NSE from corporate structural practice and reporting. We also launched the
constraints as he worked assiduously to
accelerate the timeline of the demutualization [email protected]
www.nse.com.ng
Page 13

President’s Statement appreciate the National Council members,
Management and our excellent group of
Sustainability Disclosure Guidelines in addition employees across Nigeria, in addition to every
to partnering with RecyclePoints and Mental & single class of stakeholder in the NSE for
Environmental Development Initiative for another successful year in the development of
Children (MEDIC) to help preserve the the Nigerian capital markets. We are aware of
environment. our role in the economic development of Nigeria
and we will continue to transform the market
On the back of our prominent work in CSR, the and deliver a fair and efficient platform to the
NSE emerged the winner of the “Best Corporate satisfaction and delight of our customers
Social Responsibility Initiative award across the globe. We will also continue to
(Promoting Sustainability & Reporting)” at the collaborate to address challenges and develop
9th edition of the Marketing World Award. The solutions that are central to our market and the
award was in recognition of the remarkable national economy. The Group remains well
initiatives implemented by NSE to advance positioned for the opportunities ahead and we
sustainability reporting in Nigeria. This award look forward to our future prospects with
reiterates our commitment towards a brighter confidence.
and sustainable future for Nigeria.
Thank you and God Bless the Federal Republic
Conclusion of Nigeria.
The year 2020 marks the 60th anniversary of
our organization. As we hit this milestone, I Otunba Abimbola Ogunbanjo
would like to laud the foresight of our founding PRESIDENT, NATIONAL COUNCIL
fathers for establishing this essential OF THE NIGERIAN STOCK EXCHANGE
institution. I would also like to commend the
Federal Government and all other stakeholders
that have helped establish such a robust
market that has grown from the Lagos Stock
Exchange to one of the largest markets in Africa
with footprints across the globe.

There is an old African proverb that notes
“Having a good discussion is like having riches”.
The journey that we have been on together over
the last few years has been extremely
rewarding, in which we all agree that we have
made the right discussion in deciding to
demutualize our esteemed organisation. It is in
this regard that I would like to sincerely

Page 14 [email protected]
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CEO’s
Statement

CEO’s Statement

‘‘With a keen focus on execution throughout
the year, we recorded remarkable milestones
and made a significant leap on our journey
towards demutualization’’

Nine years ago when I assumed the mantle of Operating Environment
leadership as the Chief Executive Officer of The The Nigerian capital market proved once more
Exchange, I stated my commitment to that it was in tandem with the larger economy
contribute my quota towards developing the as it began 2019 on the bearish momentum
Nigerian financial markets, creating durable with which it ended 2018. The Nigerian
wealth for her citizens, and enhancing the NSE’s economy was impacted by several global and
global brand. In addition to assembling a team local factors which led to a moderate real GDP
of passionate and well qualified individuals with growth of approximately 2% in 2019. These
a mix of experience across the globe, we have factors include sentiments following the 2019
embarked on several audacious projects over general elections, trends in global foreign
the years. The year 2019 was no different as we investments, trade tensions between the US
continued to build on our strengths and execute and China, which affected global trade
on our strategy towards attaining the corporate including demand for crude oil, as well as
aspirations we have set forth for the uncertainties surrounding the European
organization. With a keen focus on execution Union’s direction in a post Brexit world.
throughout the year, we recorded remarkable
milestones and made a significant leap on our Even though the Federal Government made
journey towards demutualization. Accordingly, efforts to diversify the economy and make it
it is with great pleasure that I reflect on another more resilient to external shocks by
resilient year of operations at the NSE despite a implementing the Economic Recovery and
tough operating environment. Growth Plan (ERGP), foreign investors still

Page 16 [email protected]
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CEO’s Statement 2019. We lived up to our mantra of being the
sustainable stock exchange championing
sought safer haven in their home and adjacent Africa’s growth as we witnessed the listing of
countries – which were experiencing an several corporate green bonds on our platform.
upsurge in the price of risk-based assets, as FPI In the ETF market, turnover and trade volumes
outflows outstripped inflows to The Exchange. declined by 46.80% and 61.37% respectively
In addition, moderate corporate performance in indicating a flight from most of the underlying
2019 on the back of subdued private instruments by investors, however, the ETF
consumption and concerns around the stability assets under management increased by 7.43%
of the Naira despite CBN’s welcomed to N6.58Bn driven by additional listing and rise
intervention in the FX market, led to a negative in the price of NewGold ETF.
impact in the equities market as The Nigerian
Stock Exchange (NSE) All Share Index (ASI) Financial Performance
which started the year at 31,070.06 points The NSE Group demonstrated resilience
declined 14.60%, breaching the 30,000 mark in through the economic and market challenges,
the process, to close at 26,842.07 points. Our closing the year with revenue of N7.78Bn, a
Fixed Income market, however, continued to modest increase of 1.46% from 2018. Operating
perform well in 2019, reflecting investors’ surplus was N2.27Bn; a 16% decline from 2018
preference for less risky assets. Despite these largely due to an increase in operating and
challenging operating conditions, we continued personnel expenses which was driven by The
to execute our corporate strategy which is Exchange’s long term view to undertake certain
aimed at amongst other things: enhancing The projects and invest in human capital. Whilst
Exchange’s value proposition to various revenue from listings grew by 19.83% owing to
stakeholders (i.e. exchange value chain); the listing of MTN Nigeria, Airtel Africa and
optimizing The Exchange’s organizational SAHCOL, transaction fees declined by 17.19%
structure; deepening retail participation in the reflecting the general capital market trends
Capital Market; and capitalizing on big bang within the period. I am pleased by the positive
opportunities (e.g. new initiatives) via the results generated from our diversification drive
Strategic Plan for 2018 – 2021. as market data income increased by 6.38%.

Trading Performance The Group’s balance sheet continued to flourish
Despite the negative return posted by the ASI, as total assets grew by 10.42% to N32.10Bn
the total market capitalization of the NSE while net assets increased by 9.73% to
increased by 15.26% to N25.89Tn in 2019 owing N28.44Bn – just N1.56Bn shy of our corporate
to an increase in the equity market strategy goal of N30Bn net assets by 2021.
capitalization and fixed income market
capitalization. The equity market capitalization Strategic Execution and Partnerships
increased by 10.55% to N12.97Tn in 2019 During the year, we showed commitment to
largely due to the listing of some of Africa’s achieving our strategic objectives. We focused
largest companies; most notably the listings of on executing on the NSE’s 2018 - 2021
MTN Nigeria Plc and Airtel Africa. The fixed Corporate Strategy, inclusive of restructuring
income market capitalization increased by the organization, onboarding new financial
20.42% to N12.92Tn in 2019 with the Federal instruments and developing the market, as well
Government of Nigeria (FGN) accounting for as focusing on customer centricity. An
over 60% of total listings as the FGN continued important marker of our Vision of becoming
to raise funds through the capital market to Africa’s Preferred Exchange Hub is to
fund the economy. We continued to validate our successfully demutualize the organization and
position as a capital-raising platform for both as highlighted by the Council President, we
business and government issuers as capital
raising by Corporates increased by 321.61% in [email protected]
www.nse.com.ng
Page 17

CEO’s Statement Afrinvest High Dividend Yield Index to serve as
tools for investors to evaluate the performance
made a significant leap in 2019 as we received a of their investments in the banking sector or
letter of ‘No Objection’ from the Securities and high dividend paying stocks as apt. We also
Exchange Commission (SEC) to enable us partnered with Meristem Securities Limited to
proceed to the final stages of the launch the NSEMeristem Growth Index and
demutualization process. We are working NSE-Meristem Value Index to provide a
fervently to complete this process which was benchmark for the market to gauge the
muted 20 years ago and we expect to be a performance of value stocks and growth stocks
demutualized entity by FY 2020. This new listed on The Exchange. We will continue to
phase of our history will give us unprecedented partner with various stakeholders to enhance
impetus to pursue various objectives and better the depth of our market and increase our
serve our stakeholders as we become a more products.
agile organization. We will continue to update
and engage with our stakeholders on progress Regulation
towards this goal. Regulation remains one of the core
components of our operation and we will
When we launched the NSE 2018 – 2021 continue to effect global standard regulation to
Corporate strategy, we stated our intent to make the market more efficient and transparent
capitalize on Big Bang opportunities and key for all our stakeholders across the globe. We
into the 4th Industrial Revolution (4IR). We reassessed our free float rules and announced
proceeded to create a new department – The amendments that will increase transparency
Enterprise Innovation Hub, to serve as our and improve liquidity in the market. Together
anchor as we respond to emerging trends. In with the SEC, we made it easier for issuers to list
2019, pursuant to these strategic objectives, we on The Exchange by streamlining the listing
organized our first ever Hackathon to identify processes which we hope will encourage more
capital market solutions that could trigger the listings on our market. We made changes to the
interest of young people and drive retail rules on equities pricing methodology to ensure
participation in the market. We have better stability in listed company prices and
subsequently partnered with the most fairness in trading these securities. We also
innovative solution providers identified and will enhanced the NSE/SEC financial reporting
deploy the solutions to the market in the near template for Capital Market Operators to align
term. We hosted the first annual general with new International Financial Reporting
meeting of the Fintech Association of Nigeria Standards and compliance requirements. In
and forged partnerships with several line with our efforts at boosting investors’
institutions such as Seedstars and Rubies to confidence, we facilitated restitutions and
improve The Exchange’s support to startups recovery of shares worth N1.43Bn for investors
and the Fintech ecosystem in Nigeria. in 2019. We will continue to review our rules and
processes to ensure that the highest levels of
To highlight our green initiative, we signed an regulatory oversight are upheld in our market.
MoU with the Luxembourg Stock Exchange
(LuxSE). The LuxSE is the leading green debt Developing Best in Class Capabilities
financing platform on the planet and this MoU As part of our capacity building efforts, our X-
will grant local green bond issuers access and Academy team delivered a Learning
visibility to international investors while Management System which automated the
promoting the cross-listing and trading of administration, documentation, tracking,
Green Bonds in Nigeria and Luxembourg. We reporting and delivery of educational courses
partnered with Afrinvest Securities Limited to for The Exchange. Our quest to empower
launch two new factor indices; the NSE-
Afrinvest Banking Value Index and NSE- [email protected]
www.nse.com.ng
Page 18

CEO’s Statement Conclusion
Prior to the new coronavirus pandemic (COVID-
finance professionals in Africa received a major 19), the Nigerian economy was expected to
boost as we obtained full accreditation with the grow by 2.5% in 2020. It is now expected to go
Center for Management Development. Our into recession as we battle to stop the virus.
efforts in 2019 saw us record a 150% increase in The Exchange on its part will continue to be
the number of professionals trained. We will supportive of these efforts, while accelerating
continue to harness the potential of our X- its digitization efforts as a way to survive the
Academy to become a globally recognized hub pandemic and indeed thrive post COVID-19. In
for learning and development in the capital spite of the health and economic challenges
market. Our course offerings and training unleashed by COVID-19, I believe that with the
programmes will be continually reviewed to measures we have already put in place, our
contain relevant and bespoke content that demutualization, and restructuring, our
addresses the needs of an evolving world. We company is positioned for the near term growth
will also take advantage of existing NSE and long term prosperity.
partnerships with leading global institutions
such as the Chartered Insititute for Securities I am deeply grateful to our regulator, the SEC,
and Investments (CISI), CFA Institute, etc., to our Dealing Members and various stakeholders
facilitate and deliver world class training for their unflinching support last year. In a very
programmes. special way, I would like to thank the National
Council for their continued belief in and support
Outlook for 2020 for The Exchange’s Management. Last but not
In the Federal Government 2020 approved least, I say a sincere ‘thank you’ to the NSE’s
budget framework, Oil revenues constitutes stellar group of employees for their unwavering
about 31% of total revenues and given the commitment and steadfastness throughout
dependence of the Nigerian economy on Oil this period. As African Champions, we will
exports for FX receipts, we expect that the price deliver on our great promise of becoming
of Brent will affect investors’ sentiments in the Africa’s preferred exchange hub.
capital market. This is against the backdrop of
increasing geopolitical tensions, concerns God bless you and God bless Nigeria.
about climate change, and challenging fiscal
and monetary policy environment. OSCAR N. ONYEMA, OON
CHIEF EXECUTIVE OFFICER OF THE
More recently, the outbreak of the deadly NIGERIAN STOCK EXCHANGE
corona virus has changed all of our projections
for global economic growth, with levels of
uncertainty not seen since the global financial
crisis of 2007/8. Accordingly, FGN intervention
policies, structural reforms and greater
collaboration between the public and private
sectors have become even more critical to the
performance of the domestic economy.
Enhanced focus on saving the lives and
livelihoods of Nigerians has also become
paramount.

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Strategy Report

Strategy Report

Advancing Africa's Global Capital Markets

The Nigerian Stock Exchange (NSE or The pursue world-class products, globally
Exchange), the sustainable stock exchange recognized regulatory standards and
championing Africa’s growth, services the sustainability practices, best-in class
largest economy in Africa. Consistent with its technologies, and innovative financial outreach
Mission, NSE continues to support initiatives. Accordingly, we hold a number of
corporations to meet their business objectives leadership positions in several international
by providing access to fund raising via the and regional organizations that we partner with,
capital market while providing local and global aimed at enhancing the development and
investors community with an array of securities integration of global best practices across all of
– Equities, Bonds and Exchange Traded our operations.
Products (ETPs), Memorandum Listings, etc. to
help meet their investment objectives. As we celebrate our diamond jubilee in 2020,
the NSE will evolve in order to meet the needs of
In addition to The Exchange’s core business of its valued customers across the globe, and to
providing a platform for listing and trading of achieve the highest level of competitiveness.
securities, NSE offers market data services, Going by our goal to be a leading force in
technology services, regulatory services, customer experience, by creating loyal and
trainings and licensing services. In furtherance delighted clients and stakeholders, we will
to our commitment to adopting the highest continue to provide a platform that will connect
levels of international standards, we Nigeria, Africa and the world.
collaborate with like-minded institutions to

Listing and Trading:

Equities Fixed Income ETFs Mutual Funds REITs Rights

The Exchange, in stimulating economic growth, offers listing and trading services, licensing services,
market data solutions, ancillary technology services, regulatory services, trainings and more…

Services:

Market Data Technology Regulation Training Licensing

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Strategy Report

Advancing Africa's Global Capital Markets

Our Vision concisely states our ambitions to become a multifaceted exchange that cuts across various
markets and geographical regions. We aim to be a leading force in the Customer Experience, creating
loyal and delighted clients and stakeholders.

Africa’s We Create Value for Investors and Businesses
in Africa and Beyond

We are the engine to Africa’s largest economy. We measure our success by
the size and prosperity of our community of issuers, investors and
intermediaries in Nigeria, Africa and world over. We aspire to increase our
regional impact by helping more companies unlock their growth potential,
providing new, accessible opportunities for citizens to create durable wealth,
and better supporting governments to achieve inclusive growth and
sustainable development. We are committed to achieving the highest levels
of competitiveness across our business, matching local expertise with global
insights, best practices and partnerships.

Preferred We are No. 1 for Customer Experience

We aspire to be the preferred market for the end-to-end customer
experience. We will achieve this by engraining customer service as a core
organizational competence, elevating our ecosystem and providing a
portfolio of globally competitive products and services which help our
customers achieve their financial ambitions. Being “preferred” means
becoming number one. In attaining service excellence we require dynamic
solutions, business agility and a customer-focused workforce. To anticipate
and satisfy our customers’ needs, we must engage broadly, learn quickly and
continuously improve our products, services and operations.

Exchange Hub We are an Integrated, Multi-Exchange Business
with Diversified Revenues

We will become the premier exchange hub in our region, by adding new
subsidiaries and business lines that complement each other and support us
to provide better service for our customers at lower costs, via economies of
scale.
At the heart of this, is our quest to operate in new geographical markets via
consolidation of our business, and enter new product markets such as
derivatives. Our aspirations also span the clearing and settlement,
technology and market services businesses, as we seek to lower trading
costs, enable seamless cross-border trading and settlement and maximize
value creation for our stakeholders.

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Strategy Report

Our Strategic Focus embrace change, innovation and growth. Our
success is built on a clear strategic direction
We are a people-focused, result-oriented and a shared commitment to NSE's Vision,
organization with a high-performance and Mission and Core Values.
intellectually challenging work environment.
We are driven by our core values and constantly
streamlining our processes to enable us

Our Mission Our Vision Our Quantified Our Core Value
Vision
To provide investors To be Africa’s Ambitious, Inclusive,
and businesses a Preferred Exchange To be the preferred Fair
reliable, efficient and Hub exchange hub in
an adaptable Africa with a return
exchange hub in on asset of 26% and
Africa, to save and total net assets of
to access capital N30 billion by 2021
(1 – 2 – 3 – 4)

We continue to run a sustainable business and adaptable entity. This is reflected in our
model to help us cushion the effects of cyclical financial results and overall performance.
changes in market conditions and deliver new,
innovative opportunities for wealth creation. Continuous improvement, customer feedback
We operate in a market that is increasingly and engagements, alongside the constant
more competitive with the needs of customers pursuit of service excellence are key to how we
rapidly changing, therefore, we provide a range view Strategy at the NSE. Agility in execution
of investment products, custom tailor to satisfy and a translucent approach to stakeholder
customers’ needs. management also provides keen insights into
initiatives we implement that engender market-
The issuance and trading of these products is wide impact.
powered by world-class technologies and
robust regulatory frameworks, to ensure a The Exchange will continue to advance its
reliable and an efficient access to capital business model to create a truly sustainable
formation and value creation. In anticipation of exchange hub for wealth creation and find more
derivatives trading on The Exchange, our innovative ways to increase capital flows to
technology infrastructure has been enhanced sustainable companies and projects that are
to support the trading of this product. In focused on fixing social or environmental
addition, a derivatives market rule book which challenges.
would serve as a guide for trading derivatives
on the bourse was released in the year under
review. We believe that Exchange Traded
Derivatives would aid efficient price discovery
and risk management for our investors.
By placing strategy at the forefront, we have
seen our business emerge from challenging
conditions to be a more responsive, resilient

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Strategy Report

Strategic Themes

The NSE leveraged on the Balanced Score Card are aligned with its bold new vision of becoming
(BSC) approach in it’s strategy implementation Africa’s Preferred Exchange Hub.
and as a part of the NSE’s 2018 – 2021 Accordingly, all initiatives executed are in line
corporate strategy, we identified four Strategic with the four strategic themes, which we’ve
Themes, cutting across the four BSC made commendable progress in achieving our
perspective being financial, customer, goals at the halfway mark, while optimizing our
processes and employee & systems, to ensure resources.
that the NSE’s systems, processes and people

Our Strategic Themes are: C I P

O Customer Innovation Partnerships
Centricity
Operational
Efficiency

Efficient, effective Keen focus on Effective Mutually beneficial
and reliable deepening our implementation of collaborations with
operations that customer new ideas, all our stakeholders
enables us to intelligence, better leveraging emerging to support the
quickly provide our understanding our technology to create development of a
customers quality customers’ needs dynamic products sustainable Nigerian
products and and serving them and services for our capital market
services at the best accordingly. customers.
value for best
efforts

Page 24 [email protected]
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Strategy Report

Strategy Map Our Strategic Roadmap enables the National
Council, the Executive Management team and
Driven by the advent of the fourth industrial all other teams throughout the organization, to
revolution (4IR), the NSE reassessed its unanimously agree on the universal strategic
strategic agenda to align with the changing intent of the business, fostering collective buy-
dynamics of the domestic and global operating in at all levels. This also holds true for our
landscape. This culminated in a new corporate various classes of stakeholders.
strategic road map for the 2018 – 2021 period,
with three key focus areas: (i) Enhancing our
customer focus; (ii) Reorganizing for
optimization; and (iii) Capitalizing on ‘Big Bang’
opportunities.

Our Strategy Roadmap

Operational Customer Innovation Partnerships
Excellence Centricity

Page 25 [email protected]
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Strategy Report well as the listing of North South Power
Company Limited’s N8.5Bn corporate
2019 in Numbers infrastructure Green Bond.

The Exchange demonstrated another diligent In our commitment to promote continuous
year in strategy execution, despite a financial literacy in Nigeria, we reached an all-
challenging operating environment, in line with time high of impacting over one hundred
its unwavering commitment to delight thousand participants in our various financial
stakeholders with more asset classes as well literacy programs and trained over 2,400 people
as further deepen the capital market. We since the launch of the X-Academy online.
achieved three new company listings, one ETF
listing, the ground breaking listing of Access
Bank Plc’s N15Bn Green Bond, the first of its
kind to be issued by an African corporate, as

163 114 10

Listed Equities Listed Bonds Listed ETFs

3 116,089 53

Ground Breaking Participants in Memorandum
Listings financial literacy Listings

programs

2,417 15% 7

People trained Increase in Market Capital Market
via X-Academy Capitalization Events

Due to sustained primary market activities from N22.46Tn in 2018. In addition, we
throughout the year, the total market organized knowledge-sharing events with the
capitalization increased by 15% to N25.89Tn aim of deepening the financial ecosystem.

Page 26 [email protected]
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Strategy Report The year under review marks the second year
since initiation of the corporate strategy and
Strategic Performance 2019 commendable strides have been made in
implementing our strategic plan. The 2018 –
In response to evolving economic conditions 2021 strategic plan comprises the following
and rising domestic competition, the National initiatives:
Council in its strategy session in 2017,
encouraged Management to reassess The
Exchange’s strategy and develop a new four
year corporate strategy from 2018 – 2021.

Targeted efforts Drive order flow Boost activity
towards ‘delighting’ by invigorating across product
stakeholders across retail market classes and
the value chain service offerings

12 3

45 6

Elevate the Capitalize on Attract & develop
Nigerian capital core competencies high performance
market and emerging professionals
technologies

Page 27 [email protected]
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Strategy Report

Strategic Performance 2019

The table below contains a summary of our progress on the implementation on our six (6) broad
strategic initiatives for the period under review.

Initiative Progress in 2019 Key
Description Strategic
Impact

1 Delight Listings drive: Attained three new company listings in F1 C1
stakeholders 2019 – MTN Nigeria Plc by introduction, Airtel Africa and C2
across the SAHCO Plc by IPO; – and one ETF listing – Greenwich
value chain Alpha ETF. Listed Access Bank Plc and North South Power
Company Limited Green Bonds.

Index launch: Collaborated with Afrinvest Securities
Limited to launch the NSE-Afrinvest Banking Value Index
and NSE-Afrinvest High Dividend Yield and launched the
NSE-Meristem Growth Index and NSE-Meristem Value
Index in collaboration with Meristem Securities Limited.

Financial Reporting: Enhanced the SEC/NSE financial
reporting template for Capital Market Operators to align
with new International Financial Reporting Standards and
compliance requirements.

2 Drive order Investor Protection: Facilitated restitutions and C1
flow by recoveries of shares worth N1.436Bn for investors
invigorating pursuant to The Exchange’s strategic focus on Investors F1 C1
retail market Protection. C2

3 Boost activity Free Float Rules: Revised free float rules to enhance
across liquidity amongst quoted companies and streamlined the
markets, listing process to reduce the time to market for issuance
products and and listing of securities.
services
Securities Lending: Worked with securities lending
Page 28 agents to develop a securities lending pool currently worth
about N1.07Bn and sensitized stakeholders on the
possibilities that abound with securities lending.

Rules on Pricing Methodology: Amended rules on pricing
methodology to ensure overall market stability and
efficiency and fairness in pricing securities.

Derivatives: In anticipation for derivatives trading on The
Exchange, the NSE released a derivatives market rule book
that will serve as a guide for trading derivatives on the
bourse.

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Strategy Report

Strategic Performance 2019

Initiative Progress in 2019 Key
Description Strategic
Demutualization: Proceeded to the next steps of the Impact
4 Elevate the demutualization process which includes seeking formal
Nigerian approval from our members on our demutualization C3 P3
Capital Scheme pursuant to the SEC’s ‘No Objection’.
Market C1 C2
Strategic Partnership: Signed an MoU with the C4 P3
5 Capitalize on Luxembourg Stock Exchange (the largest Green Bond
competencies listing platform in the world) to cooperate in promoting
and emerging cross-listing and trading of Green Bonds in Nigeria and
technologies Luxembourg.

Advocacy Efforts: The Exchange continued to advocate
for business-friendly regulatory and economic
environment, working in conjunction with the Public and
Private Sectors.

Capital Market Events: Hosted the 4th Market Data
Workshop, interactive session in collaboration with
Coronation Merchant Bank for the insurance sector and
interactive session with stakeholders in the Consumer
Goods Sector. Also, held the inaugural edition of the
Islamic Finance in Nigeria (IFN) Forum in partnership with
REDmoney Group, organized Fixed Income Trading
Workshop and Retail Investor Coverage Workshop.

Financial Literacy: Joined The World Federation of
Exchanges (WFE) and International Organization for
Securities Commission (IOSCO) in the inaugural “Ring the
Bell for Financial Literacy” initiative.

Solutions: Launched X-Mobile to enhance investors’
participation in the capital market; mutual fund trading
and distribution platform to enhance retail customer
experience and X-Academy e-learning to make quality
learning accessible and affordable to individuals,
corporations and institutions. Other solutions yet to be
launched include: data portal, a subscription based online
data platform (Q2’ go-live); X-PO, electronic IPO platform
(Q2’ 20 go-live) and X-Issuer II, an enhanced issuers’
portal (Q2’ go-live).

Enterprise Innovation Hub: Organized first ever
Hackathon in the Nigerian capital market to encourage
Tech enthusiasts to develop innovative Fintech solutions
to drive up millennials participation.

Page 29 [email protected]
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Strategy Report

Strategic Performance 2019

Initiative Progress in 2019 Key
Description Strategic
Partnerships: Forged partnerships with several Impact
6 Attract and institutions such as Seed Stars and Rubies to improve
develop high listings and enhance investors’ participation in the capital
performance market.
professionals
X-Academy: In the year under review, X-Academy
obtained full accreditation with the Centre for
Management Development (CMD) and recorded a 150%
increase from 968 to 2,417 in the number of participants
trained across several courses offered.

Staff Training: An impressive 91.7% of our staff were
trained during the year. This was boosted by the launch of
the Learning Management System(LMS).

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Strategy Report

Key Strategic Highlights 2 1
2016 2015
Demutualization - The Journey so far
4 2018 3
1 2015 - Appointed the consortium of financial 2017
advisers, legal consultants and tax advisers
2019 5
2 2016 - Due diligence process; Credible
member register; Demutualization roadmap

3 2017 - Secured approval to formally commence
the process leading up to the demutualization
from The Exchange’s members

4 2018 - Demutualization Bill assented to by
the President of Nigeria and signed into law

5 2019 - Received approval to the No Objection
application to demutualize from the SEC

We are confident that in the year 2020, the NSE will complete the final steps to actualizing demutualization.

Pivotal Capital Market Listings The Inaugural Hackathon Edition
In keeping with our goal to delight our customers The 4IR and Fintech space is an emerging area
we listed Nigeria's top Telcos, MTN Nigeria which industries cannot ignore. In light of this, we
Communications Plc (“MTN”) on the Premium organized the inaugural edition of X-Kathon, a
Board and Airtel Africa Plc on the main board via a hackathon and idea innovation contest designed
cross border listing. MTN marks the first to improve the Nigerian capital market. The edition
telecommunications network provider to be listed themed, “Millennials Participation in The Capital
on the NSE Premium Board, while the Airtel Africa Market”, was aimed at enhancing retail investors’
listing was the second company to have its participation in the capital market. X-kathon is an
ordinary shares listed on both the London Stock annual contest open to talented individuals,
Exchange and NSE, as such, gives credence to the teams, and ventures in the tech ecosystem, with
successful partnership between the two innovative ideas to spur the growth and
exchanges. These companies’ listings on NSE development of the Nigerian capital market.
indicate the NSE’s platform as a veritable avenue Interested participants were asked to submit
for raising capital and enabling sustainable creative ideas, software/tech solutions and hacks
national growth. to address “low participation of millennials in the
capital market”.

Page 31 The X-Kathon is just one of the several initiatives
NSE is leveraging to unlock the disruptive
potential of the capital market and would be
climaxed by the deployment of the solutions
hashed from it over the next couple of months, to
drive the NSE’s retail participation agenda.

[email protected]
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Strategy Report strategy – in terms of its implementation whilst
making it more robust – to ensure alignment
The Road Ahead with our long term ambition to facilitate
effective execution. Accordingly, we will work
As we move into 2020 with the aspiration of with our selected strategy consultant to:
becoming Africa’s Preferred Exchange Hub, we
will continue our journey towards excellence by
ensuring seamless execution of our various
initiatives. We will also refine our existing

Reassess and revalidate our current corporate strategy

We will continue to leverage Refine elements of the business and operating model
our vast network of
Expand beyond our current strategy execution period to
stakeholders and maintain an reflect the future of the new corporate structure
agile and adaptable approach
to elevating The Exchange to Restructure the Holding Company (HoldCo) and all its
complementing subsidiaries
becoming the Africa’s
Preferred Exchange Hub.

Develop an implementation plan to facilitate a seamless
execution of the strategy

As we restructure, we will realign with the structure that is positioned to capitalize on new
realization of demutualization and identify income opportunities and better support
several components as critical focus areas for Nigeria’s growth.
us to successfully transition to the new
organizational structures. We will develop and In addition, we will ensure that the HoldCo and
execute on relevant work streams – human all other subsidiaries run their independent
capital optimization, financial restructuring, strategy whilst keeping the human capital
communication and stakeholder management, factor at the forefront as we reallocate
change management, etc. – to ensure a resources across the Group.
seamless transition to the new organizational

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2019 Highlights

2019 Group Financial Highlights

Income FIVE YEAR TREND 2019 INCOME MIX (%)

7.78Bn 8.3 7.67 7.78 Transaction fees 35%

1% Investment income 22%

6.61 Listing fees 21%

Other income 10%

4.46 Market data 4%

Rental income 1%

Other fees 2%

2015 2016 2017 2018 2019 Entrance levies 5%

Interest income 0.3%

Expenses FIVE YEAR TREND 2019 EXPENSES AS A PERCENTAGE OF TOTAL

7.01Bn 7.01 Personnel cost 53%

-14% 5.97 5.76 6.17

5.26 Other 41%
Operating Cost 6%

Depreciation &
Amortisation

2015 2016 2017 2018 2019

Surplus 3.79
after Tax
2.7 Y-O-Y Growth
2.27Bn 2.27
-16%
1.8

2015 0.03 2017 2018 2019
2016

32.1

Total Assets 29.07 Y-O-Y Growth
26.69
32.10Bn 22.78 22.79 10%

2015 2016 2017 2018 2019

Note: Surplus after tax N2.27B has share of profit of equity accounted investees N1.53B.

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Enterprise Risk
Management
Report

Enterprise Risk Management Report

Enterprise Risk Management at The Exchange been instituted at The Exchange to heighten the
The Nigerian Stock Exchange has continued to risk sensitivity of employees and to integrate a
ensure sustainability in its business by culture of risk management into The
embedding the culture of risk management in Exchange’s organizational culture. All this is
meeting its obligations to stakeholders. The geared towards promoting a holistic risk
Exchange embraced the best practice in culture, a step at a time ensuring a sustainable
Enterprise Risk Management, which aligns business for our stakeholders and by that
people, strategy, policies, processes, position The Exchange for global
technology and business intelligence to competitiveness.
evaluate, manage, and optimize the
opportunities and threats we are potentially Risk Appetite and Risk Tolerance
exposed to in our efforts to maximize Since risks cannot be totally eliminated in our
stakeholders value. The integration of this business, mitigating controls are put in place to
practice has influenced our operations to reduce them to a level deemed acceptable by
improve process uptime, ensure value creation, the Management and Council based on the
and enhance enterprise resilience, operational capacity of its people, processes and
effectiveness and efficiency. procedures. Our risk appetite sets a clear
strategic direction that aligns The Exchange’s
As part of our objectives to ensure the business risk tolerance with its business and objectives.
is a going concern, The Exchange integrated Additionally, it outlines the aggregate level and
Enterprise Risk Management into its work types of risk on a broad-based level that The
ethics making it a prerogative at all levels of the Exchange is willing to assume within its risk
organization to communicate the actionable capacity to achieve its objectives and is defined
risk information to the Management and by our Risk Appetite Statement.
Council at all times. Thus, risk management
and project risk management have become a Our risk tolerance specifies the acceptable level
prerequisite for decision making in our of variation relative to set risk appetite or
business. achievement of specific strategic objectives.
Furthermore, it outlines the level of risk which
In line with this, the Enterprise Risk The Exchange is willing to tolerate without
Management Group updated the risk incurring significant financial losses.
management framework hinged on global
standards like the ISO 31000:2018 as well as Risk Governance
Basel II and COSO ERM 2017, to provide a To ensure that the tone for risk is set correctly,
comprehensive, systematic, disciplined and risk governance at The Exchange takes into
proactive process that is implemented to account; roles, responsibilities and
identify, assess, manage and report on the accountabilities of the Council, Senior
strategic business risks, and all risks related to Executive Management, and the Enterprise Risk
the achievement of The Exchange’s strategic Management Group, to guide and direct The
objectives and transformation agenda. To this Exchange risk program. Risk governance is
end, Enterprise Risk Management Group works therefore achieved through the collaborative
with the risk owners periodically to ensure effort of the Council through the Audit and Risk
ongoing oversight/controls to mitigate the Management Committee (ARMC) to the
likelihood of these risks occurring. Executive Management, Divisions/Business
Units, Enterprise Risk Management Group and
Risk management has evolved beyond risk Internal Audit for independent assurance.
assessment and reporting and as such, we
continue to empower ourselves and The
Exchange to manage risks effectively in our
market. Therefore, periodic risk awareness has

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Enterprise Risk Management at The Exchange

National Council

Audit and Risk Management Committee (ARM)
Executive Management

SECOND LINE OF DEFENSE THIRD LINE OF DEFENSE Regulators and External Auditors
Enterprise Risk Management Group Internal Audit

FIRST LINE OF DEFENSE
Individual Divisions/Business Units

Risk Owners and Champions

To ensure the effectiveness of The Exchange’s business, adopting strategies to identify
ERM framework, the Council and Executive departmental risks opportunities and
Management rely on line functions – including implementing risk mitigation actions that
monitoring and assurance functions – within aligns with The Exchange’s risk appetite. They
The Exchange. A model that dimensions the have the responsibility of front-line monitoring
interrelationship between functional lines and of these risks.
provides the essence of their roles and
responsibilities is the “Three Lines of Defense The second line of defense is made up of
Model”, and The Exchange has adopted this enterprise risk, compliance, internal control,
model to articulate the line functions and information security and business continuity
integrate the organizational governance functions within the Enterprise Risk
structure with the ERM framework in order to Management Group, which owns aspects of
deliver a robust framework for the the risk management process and monitors the
management of risk. The lines of defense implementation of effective risk management
model serve as a primary means to practices. They provide oversight and
demonstrate and structure the roles, integration guidance on risk assessment,
responsibilities, communication and quantification, measurement and controls, and
accountabilities for decision making and supports Executive Management by bringing
controls towards achieving effective expertise and monitoring of the first line to
governance risk management and assurance. ensure that risk and controls are properly
managed. For effectiveness, they work with
The first line of defense are the business units and collaborate with the business units
handling the day to day activities of the towards achieving The Exchange's objectives.

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The third line of defense provides assurance to Executive Committee:
Executive Management and the National Provides a forum for peer review and challenge
Council that the first and second lines’ efforts the key risks facing the organisation. They
are consistent with expectations. This is an approve the ERM strategy and champion an
assurance function performed by the Internal ERM culture throughout the organisation,
Audit department to provide assurance on the coordinating ERM priorities and decision
effectiveness of governance, risk management, making.
and internal controls, including the manner in
which the first and second lines of defense Enterprise Risk Management Group:
achieve risk management and control Responsible for developing, and continually
objectives. improving the implementation of the ERM
framework, supporting the integration of risk
Our governance model provides guidance for management into strategic planning and
the implemented structure and the assigned developing the risk appetite.
roles and responsibilities of parties to increase
the effective management of risk. Some of the Divisions/Business Units:
roles of these stakeholders include: Accountable for the identification, assessment,
management of and reporting on the key risks
The National Council: in their divisions and provide the necessary
Oversees the establishment of a risk resources and ensure alignment with the ERM
management framework that defines The framework and process.
Exchange’s risk policy and related processes,
risk appetite and risk tolerances, and is Risk Champion:
responsible for satisfying itself that the ERM Point of contact for the Risk Management team
framework and processes in place are sound with business unit and responsible for the
and effective. quarterly risk reporting to the unit. Identifies
and evaluates risks in their specific units that
Audit and Risk Management (ARM) may hinder the achievement of The Exchange’s
Committee: strategic objectives.
Responsible for assisting the Council in setting
business risk strategy and policies in liaison The Three Lines of Defense model, articulate
with management and, in the discharge of its who does what and distinguishes among three
duties relating to corporate accountability and groups (or lines) involved in the control of an
associated risk in terms of management effective enterprise risk management process
assurance and reporting. and categorized thus;

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Head of Departments

RISK 1st Line [Division / Business Units (BUs)]
GOVERNANCE
CEO’s Office Regulations Listing Business E
RISK Se
FRAMEWORK Shared Services Trading Business
Esta
Day to day risk management and control, Com
within the policies set by the 2nd line of defense. ensu
HODs adopt strategies to identify departmental pro
risks / opportunities and optimize return on capital. Own
corp
RISK HODs’ own BU Function risk Identification process Fram
IDENTIFICATION - Document process Sup
- Identify risks Busi
& - Measure and prioritize risks and implement risk
MANAGEMENT Cond
mitigation actions aligned with BU risk appetite. risk a
and q
MONITORING Responsibility for self-assessment of risk/testing of Supp
TESTING, & controls and “front line” monitoring. prov
VERIFICATION Ensu
man

Cond
Diss
Revi
the B

RISK Responsible for on-going departmental updates / Upda
REPORTING reports of existing and potential risks, management to EX
of risk register, ensuring effectiveness of controls.

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Enterprise Risk Management Group Audit

2nd Line [Standard Setters] 3rd Line [Assurance]

Enterprise Risk Management, Information Internal External
ecurity, Business Continuity Compliance and Audit Audit

Internal Control Independent assurance
over the risk and control
ablished Risk Management, Internal Control, framework.
mpliance and Cybersecurity framework guidelines and
ure Business Units have an effective risk management Identify business risks for
internal audit.
cess that operates within the guidelines. Develop plan for IA/External
nership, development, review and deployment of audit testing
porate policies, including Enterprise Risk Management
mework.
pport interpretation of corporate policies within
iness Units.

duct periodic/ongoing reviews of risks, e.g., conduct
assessments, info security reviews, ERM assessments
quality reviews.
port senior management in strategy settings by
viding relevant risk analysis.
ure that BUs assign appropriate accountability for risk
nagement (prevention/detection or remediation).

duct periodic review of ongoing BU monitoring program. Conduct independent testing
seminate results to respective risk and control groups. testing of design and
iew progress on mitigation status of critical risks within operating effectiveness of
BU. controls.

ate reports ARM Committee Council level Assurance on controls
XCO Reports risk reports. and framework elements

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Risk Profile
The Exchange in the course of its operations identifies and differentiates the following major types of
risks:

Risk Risk Description Mitigation Strategies

Strategic These are risks that arise as a result of The Exchange makes continuously
Risk the decision of Management and keep abreast of changes in the macro-
National Council regarding the economic environment, policies, and
strategic vision of The Exchange and technology
can affect the development and Risk assessment of Enterprise’s
implementation of The Exchange’s strategic objectives
strategic objectives

Operational These are risks that can cause a Upgrade of all the technological systems
Risk failure of the Exchange’s internal Quarterly review of Business Continuity,
processes and a cessation of major and Disaster Recovery Plan
business systems that can lead to a Implementation of Information Security
delay in service delivery Management Systems and cyber
security strategies

Compliance The risks of facing regulatory Continuous engagement with the
Risk sanctions and legal penalties which regulator
may also result in financial loss and Monitoring changes in the regulatory
reputational damage as a result of and legal landscape
breach of contractual agreement and Regularly monitor the adherence to all
failing to adhere or act in accordance the reporting deadlines and report
to the rules and code of conduct as findings to Management and National
instituted by the Securities and Council
Exchange Commission
Survey of The Exchange’s competitive
Business The risk that the competitive landscape and review of The
Risk landscape may hinder The Exchange Exchange’s business processes
from meeting her financial goals. Risk assessment of the Exchange’s
projects
Financial The risk of financial loss that may be
Risk as a result of a revenue shortfall, Strategically invest The Exchange’s
expenses over-run or fines from surplus in predictable growing stream
regulators. of income
Ensure strict adherence to budgetary
External These are risks that affects The provisions
Risks Exchange from its external Zero tolerance to regulatory
environment and may be out of the infractions
control of Management. However,
Functional Government Relations
department to iincrease government
advocacy / engagement with policy
makers

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External measures are put in place to prepare Conduct periodic business continuity
Risks for them and cushion the impact if and disaster recovery tests
they occur. These risks include Implementation of occupational health
political risks, natural disasters, and safety practices
changes in industry fundamentals
and macro-economic environment.

Reputational The potential for negative publicity, Continuously manage relationship with
Risks public perception or uncontrollable media to control the narrative around
events that can have an adverse effect the information being published
on The Exchange’s reputation, Tracking positive and negative
thereby resulting in brand damage publications in the media for immediate
and financial loss response and action
Shape public perception by releasing
information about The Exchange’s
activities

Risk Monitoring Exchange and on emerging risks arising from
Enterprise Risk Management Group continues new products, services or strategic initiatives.
to monitor all identified risks to ensure that they
are actively managed, while controls in place 2019 in Review
are tested and verified periodically to confirm In the year under review, all efforts were geared
they are working effectively and The towards achieving a better understanding of
Exchange's risk exposure across the enterprise risk across multiple functions and departments
is managed to an acceptable margin within The as well as developing a risk management
Exchange's risk appetite. The effectiveness of philosophy that is integrated into all levels and
these controls and implementation of new in decision-making activities of The Exchange.
controls are monitored through the real-time Hence, we updated The Exchange's Enterprise
reporting and documentation of the risk in Risk Management (ERM) Framework to align
departmental risk registers by the Risk with recent changes to two globally acceptable
Champions in all Business Units. risk management standards (ISO 31000:2018
and COSO ERM 2017). Also, this was done in
Furthermore, external and emerging risks are line with the standard requirement to update the
identified and assessed. Where feasible, framework periodically to align with best
mitigation strategies are proposed to reduce practice and reflect recent changes within the
the probability and/ or the impact of these risks internal and external environment.
and to better position The Exchange to take
advantage of these projected situations should The risk management team recorded
they occur. The Enterprise Risk Management successes in the enterprise risk awareness
Group juxtaposes these risks with the risk program and made significant impact in
appetite of The Exchange and report on the ensuring that The Exchange acts proactively in
significant risks through The Exchange the face of a changing work environment by
Business and Risk Report to the Executive instituting ad-hoc risk assessments for
Management and Audit and Risk Management projects and initiatives we embark on. In
Committee of the National Council on a deepening the activities of risk management
quarterly basis. This provide a basis for the across all levels at The Exchange, Enterprise
Committee to understand and assess the Risk Management Group re-instated the job
adequacy of decisions made by the functions of the Risk Champions who are the
Management on the key risks faced by The first liners in the three lines of defense and

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deployed risk registers to the departments to practice to counter cyber security threat actors
document risks inherent in their individual that are synonymous with the internet and
business units and processes. These registers technology usage. We successfully
are a repository for all the risks inherent in the benchmarked our Information Security
business units and they are updated quarterly Management System (ISMS) practices against
and submitted to the Enterprise Risk the renowned ISO 27001:2013 global standard
Management Group who then collates them and we have continued in our commitment to
into the enterprise wide risk register. maintaining the highest standard of
Information & Cyber Security practices.
Moreover, in deepening the culture of Risk
Management at The Exchange, the annual risk The ISO 27001:2013 certification is the most
management training session was held. The stringent global standard for Information
training focused on reiterating to staff, their Security management certified by the British
responsibilities in risk management. Also, the Standards Institute (BSI), the United Kingdom
Risk Champions were trained on the changes to based agency that provides assessment and
the risk management process landscape. certification to management system standards
across 150 economies globally. It is the only
Information Security at The Exchange auditable international standard which defines
The Exchange information and cyber security the requirements for Information Security
risk management strategy adopts a Management Systems. In 2019, we validated
multifaceted approach to securing both our continued adherence to this global best
information assets and connectivity, through a practices through the successful BSI audit post
paradigm that ensures that there is a tight re-certification.
collaboration and cohesion between our people
and the processes they effectively optimize, our Our risk mitigation strategies ensure that the
cyber infrastructure as well as the information confidentiality, integrity and availability of our
in our care, and the underlying physical assets. information assets and cyber infrastructure are
This is because we understand the importance assured. This is achieved through planned
of cyber security within the digital world and the initiatives and controls, which ensures that
need to ensure our risk management strategies regulatory and operational risk in the operation
are truly integrated across the three tiers of of information and cyber technologies are
defense at The Exchange. mitigated. This provides an assurance for the
proper functioning and stability of the capital
Cyber security has taken an important role market infrastructures. Some of the notable
within the digital world because it provides the initiatives executed in 2019 are:
needed assurance to securely take advantage
of the possibilities offered to organizations and Successfully maintained the ISO
business by technology, including the new wave 27001:2013 global standard as The
of industry 4.0 technologies, and the world's Exchange was re-certified in 2019
population's embrace of an interconnected The Exchange successfully achieved
world. At The Exchange, we understand the compliance with the recently introduced
need for cyber security risk assurance and we Nigeria Data Protection Regulation
provide unrivalled services through the (NDPR), which includes an audit of
adoption of innovative technologies, processes and practices for protecting
automation and data products to deliver a Personally identifiable information (PII)
platform that creates business opportunities The Exchange organized the 7th Edition of
within the capital market and also enhances the our Nigerian Capital Market Information
digital experiences of our customers. Security Forum (NCMISF). The aim was to
improve knowledge and capacity within the
We deliver this securely by bringing into the mix Nigerian Capital Market ecosystem on the
a top-notch cyber security risk mitigation Nigeria Data Protection Regulation and
how to achieve compliance
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The Exchange developed its Cyber Security of a business disruption. The simulation
Framework, this framework delivers a tests were carried out in conjunction with
proactive approach to cyber risk the Central Securities Clearing System
management within a dynamically (CSCS) and other members of the
changing threat environment that is global. ecosystem
It also has the advantage of delivering a Enterprise-wide awareness and initiatives
much higher level of t r a n s p a r e n c y and on crises management, emergency
trust to our stakeholders. The guiding response and business recovery planning ,
principles of the framework core consists of this is to ensure that collectively as an
five concurrent and continuous functions - organization, we can withstand a disaster
Identify, Protect, Detect, Respond and Market-wide sensitization and
Recover. The framework adopted, is based awareness on cybersecurity resilience
on the American National Institute of and business recovery planning within
Science and Technology's (NIST) the ecosystem, thereby assisting
Cyber security Framework which is a set of organizations in accelerating the time
standards, guidelines, and best practices frame to return to “business as usual”
to manage cyber security-related risk. during a crisis

Business Continuity Efforts at The Exchange Outlook for 2020
The Nigerian Stock Exchange established and In a bid to meet The Exchange's strategic vision
maintains sustainable business operations by and effectively manage and monitor the risks
consistently providing essential services in the that can affect the achievement of our
unlikely event of business disruption, meeting objectives, Enterprise Risk Management plans
regulatory requirements and ensuring the to adopt an established key metrics of risk
business remains competitive both locally and reporting; Risk Indicators, to track and monitor
globally. The business continuity management and provide early signals of increasing or
at The Exchange is benchmarked against the decreasing risk exposures in various areas of
leading global standard and industry best the enterprise.
practice, the ISO 22301:2013 on Business
Continuity Management by the British Another initiative to be implemented is the Loss
Standards Institute (BSI), United Kingdom. This Event Register, a consolidated loss event
standard enables the business to respond catalog including actual losses, near misses
effectively and promptly based on the and calibrated external loss events that occur at
procedures that had been defined before, during all times within The Exchange. This will give us a
and after a disruption. better understanding of the cause of loss
events and the actions to be taken to remediate
The highlights of business continuity efforts in the problems that led to the loss event.
2019 were:
The changes in The Exchange's work
Implementing and continual update of a environment as we prepare for demutualization
robust business continuity and disaster will require a lot of projects to be implemented,
recovery plans across the enterprise. The and as such Enterprise Risk Management team
business continuity plan documents the will be engaging the various project owners to
pre-agreed decisions and procedures to carry out project risk assessments throughout
restore mission critical services in the event the life cycle of these projects.
of a disaster, while the Disaster Recovery
plan details the process to recover critical In furtherance of The Exchange's information
IT Systems and services from any type of and cyber security risk management strategy,
disaster at The Exchange. efforts will be geared towards enhancing The
Scheduled Market-wide business Exchange's and the ecosystem’s cyber security
continuity simulations test to ensure that resilience and deepening the culture of privacy
collectively, the overall goal of least and protection of personally identifiable
disruption to critical business processes
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Page 43

information within the capital market and recovery planning through
ecosystem. workshops/forum and also carry out the
assessment of their state of disaster
Also, the business continuity initiatives at The readiness
Exchange will be entrenched, as there are plans Sustain coordinated efforts towards
in place to: ensuring that the risks to the critical
services of The Exchange are mitigated,
Carry out business continuity and and, disruptions to the business are
resilience assessment of critical minimized.
vendors/suppliers
Engage the Dealing Member Community
on the significance of business continuity

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Ethics and
Compliance

Report

2019 Annual Compliance and Internal
Control Report

A critical success factor in The Exchange in our regulatory universe and global best
realizing its vision as “Africa’s Preferred practices, documents our compliance policies
Exchange Hub” is maintaining a culture of on regulatory and statutory obligations, code of
integrity and compliance. This is made conduct and internal policy management.
sustainable through an organizational culture
that embeds compliance, integrity, Highlights of Compliance Activities in 2019
transparency, fairness and professionalism into The Exchange is strongly committed to
our day to day operations to ensure we comply ensuring compliance with all regulatory
with all applicable statutory and regulatory requirements and operating to the highest
obligations and international best practices in ethical standards. As a testament to this
the conduct of our business. We believe in commitment, we engaged in several
upholding a zero tolerance policy for regulatory compliance activities to strengthen awareness
breaches and maintaining the highest level of on compliance issues and ensure The
integrity, ethical values, social, environmental Exchange and its subsidiaries comply with
and health and safety standards for our long- statutory and regulatory obligations and
term success and delivery of value to our demonstrate a strong sense of ethics in the
stakeholders. discharge of its responsibilities. The highlight
of compliance activities during the year include
The oversight responsibility for the Compliance the following:
and Ethics program at The Exchange lies with
the National Council which ensures all Revision of The Exchange’s Compliance
compliance risks associated with The Framework to ensure it aligns with recent
Exchange’s business are proactively identified, changes at The Exchange and global
assessed and effectively managed. The Audit best practices.
and Risk Management Committee of the Monitoring and ensuring adherence to
National Council of The Exchange provides our regulatory and reporting obligations.
support to the National Council in carrying out A total of 640 reports and remittances
its compliance oversight obligations. In 2019, were rendered to the regulator and other
the National Council approved a revision to the government agencies during the year
Compliance Framework for managing The under review. Also, obligations arising
Exchange is Compliance and Ethics Program to from fines and penalties were duly
ensure it aligns with recent changes at The discharged.
Exchange and global best practices. Engaged a Data Protection Compliance
Organization (DPCO) to perform a
The Compliance Function Privacy Impact Assessment (PIA) of The
The Exchange has an established compliance Exchange’s compliance with the Nigeria
function that provides support to all business Data Protection Regulation (NDPR) and
units across The Exchange and its Subsidiaries submission of the audit report to the
to ensure we continuously comply with all National Information Technology
applicable regulatory and statutory obligations Development Agency (NITDA)
as well as operate to the highest ethical Implemented a Centralized Policy
standards. The compliance function manages Repository (X-Policy) for managing The
compliance risk at The Exchange through the Exchange’s policies in a centralized
implementation of the Council approved location.
Compliance Framework. The Framework which Continued awareness on compliance
was updated in 2019 to accommodate changes issues through an enterprise – wide
training for staff of The Exchange.
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Social and Environmental time donation of N20m, bringing the total
As a sustainable stock exchange championing funds raised in 2019 to N71m. 254
Africa’s growth, our approach to Corporate individuals benefitted from our free
Sustainability and Responsibility (CSR) cancer screening at the venue and after
influences the way we discharge duties and the event.
impact the diverse stakeholders that constitute Reached 66,749 students in 6 states
our ecosystem. Our CSR strategy is structured across the country during the 2019 Global
around four strategic pillars of Community, Money Week (GMW), a 342% increase in
Marketplace, Workplace, and Environment and the students reached during the 2018
is aligned with the United Nations Sustainable GMW engagement.
Development Goals (SDGs). Revamped The Exchange Employee
Volunteering Programme (EVP) by
As The Exchange grows in its influence across aligning the initiatives to the SDGs. A
Africa, our Corporate Social Responsibility record 84 employees signed up to the
(CSR) approach ensures that we give back to revamped EVP and participated in a beach
our local communities and provide the cleanup in partnership with Kid Beach
leadership support to enable our stakeholders Garden and the “No Tolerance Campaign”
to achieve their sustainability aspirations. organized by Women at Risk International
Below are highlights of some of our CSR Foundation (WARIF).
initiatives in 2019: Collected 2047.9kg of recyclable wastes
from The Exchange Head Office, a 172%
Launched the Sustainability Disclosure increase from the 751.8kg collected for
Guidelines in March 2019, positioning The recycling in 2018.
Exchange as one of the leading Ranked number 11 on the inaugural
sustainable securities exchanges that Forbes Africa Top 50 Brands Making a
have issued written guidance on Difference ranking. Also, The Exchange
Environmental, Social, and Governance received the Best Corporate Social
(ESG) reporting. Responsibility Initiative award (Promoting
Launched the Facts Behind the Sustainability & Reporting) at the
Sustainability Report (FBSR) series in May Marketing World Awards 2019 in Accra,
2019, to provide a new platform for listed Ghana, and the Outstanding Invaluable
companies to engage key stakeholders on Company Award for CSR from the Rotary
the progress made in their efforts to adopt International District 9110, Nigeria.
sustainable business practices.
Received 40,966 entries for the 2019 The Health and Safety
Exchange Essay Competition, marking At The Exchange, the health and safety of our
over 100% increase from the 20,016 employees, customers and visitors is a top
entries received in 2018 and the highest priority. We recognize that the safety of our
number of essays recorded in the 19-year workplace is critical to the long-term success of
history of the competition. At the award The Exchange. As a testament to this
ceremony held in December 2019, Miss recognition, we continuously follow best
Adesewa Adeniyi from Grandmates practices and standards for a safe workplace.
Secondary School, Lagos State emerged We summarise below our health and safety
the overall winner. activities in 2019.
Appointed Tuface Ujah Idibia as the Good
Cause Ambassador to help in raising Quarterly Emergency Evacuation Drill to
awareness and mobilizing support for the raise awareness on emergency response
CSR initiatives of The The Exchange procedures.
geared toward achieving the United Awareness training for Floor
Nations SDGs in Nigeria. Wardens/Marshals and new hires to
Raised a record sum of N51m at the 2019 ensure prompt and appropriate
The Exchange Corporate Challenge, response during emergencies.
exceeding our 2017 record of N44.6 Uptime of installed life safety equipment
million. The Exchange also made a first- – Ensured availability and functionality

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of installed equipment like the Fire Alarm and Amendments to its existing Rules on 21
System, Extinguishers, Emergency August 2019, 14 October 2019, and 23
Public Address System, etc. December 2019.
Aged major firefighting equipment in The
Exchange Building were upgraded and on Staying current with changes in our regulatory
full automatic mode/standby. These and statutory universe is a key component of
include the Fire Hose Reel pumps and the our robust compliance program at The
Fire Hydrant systems. Exchange.
Good Housekeeping was encouraged
among staff and followed through daily by Internal Control Report
the in-house facility team. Waste bins The Exchange recognizes that effective internal
were provided in offices, lobbies, toilets, controls are fundamental to achieving its vision
etc. Also, bins for recyclable materials and mission. In line with this recognition, the
were introduced at strategic positions to National Council approved a robust Internal
support the company’s recycling Control Framework which outlines the basic
initiative. principles for the design and operation of The
Exchange’s internal controls systems in our
Update on Changes in our Regulatory pursuit to deliver greater value for our
Environment. stakeholders. The application of a Control
The Nigerian Data Protection Regulation Framework ensures that our policies,
(NDPR) was issued by the National Information procedures, practices, and organizational
Technology Development Agency ("NITDA") on structure at all levels are linked to the
the 25th of January, 2019. The regulation achievement of the strategic and business
applies to the storage and processing of objectives of The Exchange. In keeping with
Personal Identifiable Information (PII) in The Exchange’s objective of being Africa’s
respect of Nigerian citizens and residents for Preferred Exchange Hub, our Framework for
which The Exchange has ensured compliance. managing internal controls is patterned after
the Committee of Sponsoring Organizations of
In November 2019, the Finance Bill, 2019 (the the Treadway Commission’s (COSO) Internal
Bill) was passed by a joint session of the Control Integrated Framework best practices.
National Assembly. The Bill contains proposed The Internal Control Function monitors and
changes to the Companies Income Tax Act facilitates the implementation of effective and
(CITA), Value Added Tax (VAT) Act, Personal efficient internal control practices by
Income Tax Act, Petroleum Profits Tax Act operational management and is an integral part
(PPTA), Capital Gains Tax Act (CGTA), Customs of Enterprise Risk Management at The
and Excise Tariff (Consolidation) Act, and Exchange.
Stamp Duties Act.
A summary of the thrust of our internal control
Pursuant to the Investments & Securities Act systems at The Exchange during the year are
(ISA) 2007, the Securities and Exchange depicted below:
Commission reviewed and approved new Rules

Component of our Control System Key Activities at The Exchange
Control Environment
1. As a testament of its commitment to integrity, ethical
values, and competence, the National Council (the
Council) approved an extensive revision to The
Exchange's Staff Handbook, Performance
Management Policy, and Compliance Framework.

2. The Council exercised oversight over The Exchange
control system during the year. A robust Internal

Page 48 [email protected]
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Component of our Control System Key Activities at The Exchange

Control Framework was approved by the Council for
managing control risk.
3. The Exchange organizational structure aligns with best
practice and defines roles and responsibilities directed
toward the achievement of The Exchange vision and
mission

Risk Assessment 1. The Enterprise Risk Management Framework of The
Control Activities Exchange was updated in 2019 to align with updates to
two widely accepted risk management standards; ISO
31000 and COSO ERM 2017 methodologies. This
attests to the commitment of the Council and Executive
Management (ExCO) in establishing and sustaining
best practices in risk assessment.

2. The National Council and ExCO set clearly defined
objectives to enable the identification and assessment
of potential risk exposures to the achievement of The
Exchange objectives

3. Heads of Departments (HoDs) identify and assess risk
exposures and changes that could inhibit the
achievement of objectives.

1. Controls at The Exchange are deployed through
policies and procedures. In 2019, the control function
carried out a global review of the Standard Operating
Procedure Manuals of all departments, units and
divisions of The Exchange.

2. All payment requests are independently checked by the
internal control function.

3. Approval Limits and Authorization – The Exchange
ensures incompatible roles are segregated. No single
employee of The Exchange can initiate and complete a
transaction. The assignment of transaction approval
limits is approved by the National Council.

Information and Communication 1. The Exchange communicates new/updated policies
and procedures to employees via email, intranet, and
Page 49 upload to The Exchange centralized policy repository.

2. The internal control function presents quarterly and ad
hoc report on the state of internal control in The
Exchange to the Audit and Risk Management

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www.nse.com.ng