SEC Harps On The Importance Of Investor Protection For Nigerian Capital Market Development


Monday, February 17, 2020 / 9:51 AM / SEC Nigeria / Header Image Credit: Independent Newspapers


Investor protection is one of the cardinal points of market regulation that contributes to deepening the capital market.


The assertion came from the Acting Director-General of the Securities and Exchange Commission (SEC), Ms. Mary Uduk speaking with journalists in Lagos at the weekend. 


According to Uduk, one of the ways of growing and developing the capital market is to ensure that investors can receive the benefits of their investments. 


"When people invest, it's because they are expecting returns. So, we ensure that no one takes their money away in an illegal manner and we also ensure that when profits are declared, investors benefit."


"We also encourage investors to try to diversify their portfolio, try to talk to experts and also explore the different vehicles of investments in the market so in one way or the other they will diversify their risks."


Uduk said it is the responsibility of the SEC to ensure that investors are not short-changed in any transactions in the market and therefore urged them to participate in the market to grow it.


She stated that it is to this end that the Commission is taking steps to reduce transaction costs in a bid to ensure that investors do not bear unnecessary costs. 


She said: "We are doing a lot to boost investors' confidence in our market. But I want to say that both local and foreign investors are very good for the market. Investors' fears can be of two folds; firstly, they could be afraid because they feel that capital market operators will mismanage their investments, secondly is looking at the volatility of the market that makes investors skeptical."


"For the first scenario, we have several initiatives that we have put in place to boost investors' confidence. We have the e-Dividend mandate system, the Direct Cash Settlement as well as multiple subscriptions in place. For the second category, investors have to take ownership of their investments. They have to be able to monitor their investments, attend Annual General Meetings as well as read the annual reports sent to them."


The Acting DG said investors are also protected through the National Investors Protection Fund (NIPF) Risk-Based supervision that enables the SEC to supervise the operators to ensure that they do not do what they are not supposed to do.


According to her, the Complaints Management Framework enables investors to know where to complain and how long it takes for such complaints to be resolved. For those investors that are averse to risk, they should get their financial advisers to advise them properly on where to invest.


"We also advise retail investors to invest in Collective Investment Schemes and Mutual Funds because those are managed independently by professionals, and they are diversified, thereby reducing risks."


"We are committed to protecting investors in the work we do. We will keep working on our rules and the possibility of amending them when the need arises, we want more transparency in the market so that investors will feel comfortable and the market can be better." Uduk added. 


On price movement in the equities market, The Acting DG said the regulator is more concerned about ensuring an efficient market and a liquid market.


She said "For the regulator, what we are concerned with is, do you have an efficient market, do you have a liquid market so that transaction cost will be reasonable so that someone does not take advantage of another person? But the market can move up or move down all we can do as a regulator is to ensure that people do appropriate disclosure so that I don't have one information and hide and then use that information to your detriment."


"But if all these are done, and the market moves up or down, little or nothing can be done about it and that is the essence of investment. When the market moves up is an advantage to others and some people to buy. The principle of the market is to buy low and sell high, so when it moves up, there some people who are ready there to take profit".

"That is where we need the press to support our initiatives in terms of creating a derivatives market; it will help reduce the volatility in our market. It is one of the efforts we are working to ensure we have a more efficient market," she said.

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Proshare Nigeria Pvt. Ltd.

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