Nigerian Capital Market Archives - Investadvocate

SEC Targets More Retail Investors

InvestAdvocate — Tue, 01 Mar 2016 20:05:37 +0000

March 1, 2016/SEC

The Securities and Exchange Commission (SEC) has said that the Commission aims to attract more retail investors into the Nigerian capital market in its determination to deepen and develop the market.

Director General of the SEC, Mounir Gwarzo stated this when the Commission received members of the House of Representatives Committee on Capital Markets and other Institutions in Abuja, Tuesday.

Gwarzo said that this is one of the reasons why the Commission has embarked on various initiatives line e-Dividend, Direct Cash Settlement, National Investors Protection Fund (NIPF) among others to attract retail investors to the Market.

He said “We have pursued a lot of initiatives in the last year and we are pursuing more this year. We are taking it from a perspective that this market has never witnessed and the perspective is to address some of the lingering complaints of the investor. We believe that the retail investors are the owners of this market so our strategy should focus on them.

“As a country we have only less than 2% participation of retail investors in our market. Malaysia has 9 percent, South Africa 19 percent, USA 43 percent, and UK 13 percent. So our market is highly less being participated by the retail investors. Due to the dominance of the foreign investors, anytime they move out of the market the market goes down. Our effort is to see that in the next 5-10 years we raise the level of involvement of the retail investor to at least 5 percent”.

Gwarzo said the Commission has identified some of the challenges hindering the retail investor from accessing the market and believes tackling these challenges through the recent initiatives by the Commission would be very productive.

“We identified some challenges that they have had for the last 30-40 years in this market like not receiving their dividends. That is why we came up with e-dividend. This is the first time we are addressing that issue and it is very successful. We have had Road shows in Abuja and Lagos, next week we are going to be in Kano, in three weeks time we will be in Port Harcourt.

The DG disclosed that the SEC is also addressing the issue of dematerialisation, where share certificates have not been fully dematerialised in the market.

“Since the introduction of Central Securities Clearing System (CSCS) exactly 21 years ago, we have not been able to dematerialise certificates fully. As at August last year, only 40% of certificates had been dematerialised, but as today, we have 97.5% of shares that have been dematerialised. Which means that when we fully dematerialise, the issues of a client wanting to sell his shares and has to go through the rigorous process of verification which takes 6 months to one year will be a thing of the past.

“We also inaugurated our National Investors Protection Fund and so far we have paid over 300 investors that lost their money in this market. The maximum amount is N200, 000 and the rules are already on our website for people to see. We think that by getting that NIPF it will further provide comfort to the investors” he added.

Gwarzo said the SEC is also strongly encouraging the listing of more companies in the market, as it believes that the market needs to be deep for it to be sustainable.

In his remarks, Chairman of the Committee, Dr. Tajudeen Yusuf said the Committee Members were in the Commission to see what has been done in 2015 as that will give them a good platform to look at 2016.

He said “We are all aware that the market is not doing well presently and SEC generates to own revenue from the market. So whatever that happens in the market has a direct correlation with the revenue of SEC. so, we have seen that there is need to dig deeper, cost and look for ways to ensure that as a regulator SEC is up and kicking to be able to perform their responsibilities.

“The Capital Market is an area that should bring the required resources and has been neglected for too long and we are genuinely interested in helping SEC fulfill its mandate.

“We will assist to ensure that companies that ought to be listed are listed; we need to explore avenues to getting them into the capital market. Companies that are listed pay more tax than those not listed. Maybe we should make those that are not listed to pay more tax while those listed should be given some concessions.

Yusuf expressed the need to explore areas where the National Assembly can give teeth to the regulations of the SEC as any market that has loose regulation, is dead on arrival and the National Assembly does not in any way take the SEC lightly.

He commended the Commission on its efforts at sensitizing investors so far, adding that more sensitisation needs to be done especially to those at the grassroots.

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SEC, Judiciary collaborate on Investor Protection

InvestAdvocate — Wed, 24 Feb 2016 18:40:42 +0000

February 24, 2016/SEC

The Securities and Exchange Commission (SEC) and the Nigerian Judiciary have pledged to collaborate in a bid to boost investor confidence in the dispute resolution mechanisms available in the Nigerian capital market.

Director General of SEC, Mounir Gwarzo disclosed this at the 2016 Judges Workshop organized in collaboration with the National Judicial Institute (NJI) in Abuja, Wednesday.

He said the excellent collaboration between the Apex regulator of the Capital market and the judiciary is crucial to ensure that the rights of investors are protected.

The Role and Responsibility of the Commission as provided in Section 13 of the ISA 2007 include the powers to register, inspect, investigate, discipline and suspend any market operator. The Act also gives SEC substantial powers to make rules and regulations and also to impose sanctions on and enforce decisions against erring capital market operators, or their sponsored individuals.

“In pursuance of the above mandate, we leverage on stakeholder engagements to share knowledge and information on areas of mutual interest and that is why You cannot downplay the essence of the judiciary especially in terms of investor’s protection. Investors will be very comfortable to invest if when they invest in the market and they are not able to get what they want they can have recourse to finding a way and means that the issue can be resolved.

“And the only way such issue can be resolved is when both the capital market and the judiciary are on the same page. The judiciary needs to understand the workings of the capital market; the capital market needs to understand the workings of the judiciary. This is the essence of the collaboration, for us to understand each other better”.

According to Gwarzo, Capital markets encompass all parts of the financial system where long-term equity or debt securities are bought and sold. By definition, such markets are highly specialized and governed by distinct sets of rules and regulations.

The Judiciary’s important work he said, impacts market integrity, investor confidence, market development and market fairness as it is clear that without fair, prompt and effective dispensation of justice, capital markets can never develop. Hence in the Commission’s quest to develop a vibrant capital market in Nigeria, it cannot afford to overlook the central role of the Judiciary.

The DG further disclosed that the Commission has so far paid about 530 investors those that had invested certain amounts of money ranging from N5, 000 to N200, 000 and suffered losses.

The Commission inaugurated its National Investor Protection Fund (NIPF) last November, to provide a window of relief for investors that suffer losses due to defalcations by insolvent or bankrupt capital market operators, which are not dealing members of Securities Exchange or Capital Trade Points.

In his Keynote address, Chief Justice of Nigeria, Justice Mahmud Mohammed said the workshop could not have come at a better time especially in view of ongoing SEC led capital market reforms aimed at building a world class capital market, coupled with the underlying need to boost investor confidence in the dispute resolution mechanisms available in the Nigerian capital market.

Represented by Justice Ibrahim Tanko Mohammed, the CJN said a resilient and efficient dispute resolution mechanism is imperative for a strong and reliable capital market adding that the entrenchment of sound adjudicatory processes must be seen as a precursor to a world class capital market and so, must be accorded priority.

“All over the world, capital markets are principally established to mobilize long-term capital for investment and productive purposes. Capital markets play a very significant role in our society because they enhance industrial growth and aid socio-economic development by expediting the rate of capital formation, fostering free enterprise, promoting creativity, advancement and good governance.

“Nigeria relies heavily on huge amounts of medium and long term funds for infrastructure development. The economy also utilizes capital to provide support for entrepreneurship, which in turn promotes growth and creation of opportunities. The Nigerian capital market remains the most important source of these long term funds and has continued to perform its conventional function of mobilizing capital for development purposes” he said.

The CJN added that the workshop will also afford the participants the opportunity to become better acquainted with other trending issues in the industry such as the precise role of SEC in the current reforms; the need for regulatory reforms in the capital market; corporate governance and the law and procedure of the Investments and Securities Tribunals; the impediments militating against the Nigerian Securities Market and the role of the judiciary in addressing these challenges.

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N90 Billion Unclaimed Dividend: SEC DG Advise Investors to Register for e-Dividend

InvestAdvocate — Thu, 14 Jan 2016 03:48:19 +0000

Left to right: Mounir Gwarzo, DG SEC and Zakawanu Garuba, Executive Commissioner Corporate Services SEC on a Road Show to Nyanyan market in Abuja, to sensitize investors on the e-Dividend Registration,Wednesday

By InvestAdvocate

Lagos (INVESTADVOCATE)-Mounir Gwarzo, the director general (DG) Securities and Exchange Commission (SEC) has advised investors in the Nigerian Capital Market (NCM) to register for e-dividend to ensure receipt unclaimed dividends which currently stands at N90 billion.

A statement from SEC quoted Gwarzo at an e-dividend sensitization exercise in Abuja as saying that once the Commission completes the on-going registration of investors, the next phase will be to ensure that the owners of the unclaimed dividends are paid their money.

He said. “e-dividend is very important because I believe it is going to be a major game changer, it is an issue we have had since the inception of this market whereby people buy shares and are unable to claim their dividend either because the warrant becomes stale, they change address or are living in an area that is quite far and it will take more than what the dividend warrant is worth and they will not want to go and collect it

“One of the things we will do once we are through with the registration is to see how those huge unclaimed dividends can be verified and paid to the owners. You know there is a limitation of the law that says after 12 years you cannot claim. But those that are below 12 years once people have registered and they are able to show proof that they are the owners of that dividend they should be able to claim that part of the unclaimed dividend,” he added.

According to the SEC DG, the reason it choose densely populated areas for the campaign is because the high level of unclaimed dividends belongs to the retail holders, the people that have small holdings.

“Somebody that has N1million or N500, 000 dividends will certainly find a way to claim it. So it is the N2, 000, N3, 000 dividends that people have not been claiming that has accumulated to this level. That is why strategically SEC focused on this enlightenment programme” Gwarzo affirmed.

On the downturn being experienced in the market, Gwarzo describes it as normal, saying that it happens everywhere in the world, and not peculiar to Nigeria.

“All over the world within the Emerging and developed markets, most of their markets closed on the negative last year. It is part of the trend in the market and you know that the economy all over the world is not in a good shape, oil and commodity prices has gone down significantly and all these are being reflected in the stock market” he added

The Nigerian bourse ended in bloodbath on Wednesday as the all-share index (ASI) dipped 3.6 percent to near a three-and-half-year low coming on the heels of dwindling fortunes of the naira hitting a new low of N300 per dollar on the black market after the Central Bank’s decision to restrict dollar supply and the plunging global oil prices.

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