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Business News

SEC and CBN set to re-modify rules on margin lending

The two regulators also intend to start issuing margin loans in accordance with the new rules they would set.

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SEC, Primary and secondary school students to start taking classes on Capital Market 

The Securities and Exchange Commission (SEC) is working in collaboration with the Central Bank of Nigeria (CBN) to change the guidelines on margin lending. The two regulators also intend to start issuing margin loans in accordance with the new rules they would set

They intend to add banking shares – The Acting Director of SEC, Ms Mary Uduk, disclosed this in Lagos while speaking during the first quarter post-Capital Market Committee, (CMC) media briefing. She also disclosed that they intend to re-include banking shares in the margin list.

Reason for the amendment

Uduk explained that the rules guiding margin lending had to change, especially after zero activity was recorded in the sector since the rules were created in 2010.

“After the meltdown, in 2010, the SEC and CBN came together to come up with rules on margin loan but after the issuance of that rules, we found out that there was zero activity in respect of margin loan and that is why the market suggested that it appears the rules on margin loan is very stringent.

“In coming up with that rule, probably due to the experience of the past, we excluded banking shares from margin list. We found out from other jurisdictions that you can be given loans to buy banking shares, so, because of that, we started engaging CBN.”

What is a margin loan?

A margin loan is a type of loan that allows you to borrow money to invest, by using your existing shares, managed funds and/or cash as security. It is a type of gearing, which is borrowing money to invest.

How does it work?

A margin loan uses existing shares, managed funds and cash as security. These existing assets are used to calculate your Loan to Value Ratio (LVR), which determines how much you can borrow.

Once your borrowing limit is established, you can use available funds to purchase further approved investments (shares, managed funds etc). Your new and existing investments are combined to form your total portfolio.

Interest on a margin loan is calculated daily, but how it is paid will depend on the loan. Some margin loans allow interest to be paid in advance.

What is the LVR – The Loan to Value Ratio (LVR), is the amount of your loan divided by the value of the shares or managed funds being used as security.

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Tech News

Twitter CEO auctions his first-ever tweet on Twitter, bidding at $2.5 million

Jack Dorsey is auctioning his first-ever tweet on a website that sells tweets as non-fungible tokens.

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Square buys $50 million worth of Bitcoins, Twitter warns political figures to abstain from fake, misleading statements, Has Twitter's Jack Dorsey changed the popular narrative attached to Nigerians?, Twitter forecasts future drop in revenue after milestone record in 2019 Q4 , Twitter founder, Jack Dorsey invest N2.3 million in Nigerian startup, DevCareer , Some Verified accounts may not be able to tweet, as Twitter freezes password reset to address cyberattack

Twitter CEO, Jack Dorsey is auctioning his first-ever tweet on Twitter “just setting up my twttr” on a website that sells tweets as non-fungible tokens (NFTs).

The tweet was listed for sale on ‘Valuables by Cent’ – a tweets marketplace that was launched three months ago. The tweet was first made in March 2006

The tweet received offers as high as $88,888.88 within minutes of Jack tweeting a link to the listing on” Valuables by Cent” on Friday.

Currently, bidding has reached $2.5 million (€2.1 million) indicating the potential in selling virtual objects that have been authenticated through blockchain technology.

The highest bid for the tweet — $2.5 million — came from Bridge Oracle CEO Sina Estavi. It topped cryptocurrency pioneer, Justin Sun’s $2 million bid.

The final buyer of the tweet will receive a certificate, digitally signed and verified by Jack Dorsey, as well as the metadata of the original tweet. The data will include information such as the time the tweet was posted and its text contents. Most of this information, however, is already publicly available.

According to Valuables by Cent’s terms, 95% of a tweet’s sale will go to the original creator while the remainder will go to the website.

What you should know

  • NFTs is a unique digital certificate that states who owns a photo, video, or other forms of online media.
  • Dorsey’s 15-year-old tweet is one of the most famous tweets ever on the platform.
  • Bidding had reached $2.5 million (€2.1 million) on Saturday, indicating the potential in selling virtual objects that have been authenticated through blockchain technology.
  • More people are currently bidding their tweets on the platform.

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Stock Market

Bamboo’s current rate for buying U.S Stocks weakens to N492/$1

Bamboo is currently offering its users a premium of more than 20% compared to the official exchange rate.

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The fast-rising Nigerian stock broking application, Bamboo, is currently offering an exchange rate of N492 to the dollar.

About two weeks ago,  the Nigerian stock trading app offered an exchange rate of about N484 to $1.

The green-colored trading app known for allowing local-based Nigerians to invest in stocks listed on the world’s biggest stock market (New York Stock Exchange and NASDAQ) is currently offering its users a premium of more than 20% compared to the official exchange rate set by the Nigerian apex bank.

READ: Nigerian Bitcoin P2P surges by 15% since CBN Crypto ban

That being said, Nairametrics’s most recent research observed Chaka. ng offers the lowest exchange rate charge of N480 to 1$, other Nigerian-based stock trading apps that include Throve and Risevest currently offer their clients N491.68 and N486 to $1 respectively.

In addition, other leading fintech platforms reviewed by Nairametrics also presently offer exuberant rates as high as about N519 to a dollar, thereby adding more transaction costs on a significant number of Nigerians hoping to trade such financial assets.

A growing number of Nigerians are currently increasing their exposure to the U.S stock market taking to the current bearish trend that is being witnessed in the Nigerian Equity market and growing urge in hedging against the weakening local currency.

Consequently, a lot of Nigerians are flocking the New York Stock Exchange (NYSE) on the account it has about 2,800 companies listed, while the NASDAQ has about 3,300 stocks listed. This gives Nigerian investors numerous options where they can invest their money. It is also why the US economy attracts billions of dollars in portfolio investments annually.

READ: Many Nigerians are trooping into foreign stock markets

Bamboo is an investment platform that gives Africans real-time access to invest in or trade over 3,500 stocks listed on the American and Nigerian exchanges right from their smartphones or personal computer.

In partnership with US-based Drive Wealth LLC, Bamboo provides seamless, secure access to US and Nigerian securities.

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