Investor protection has been identified as one of the cardinal points of market regulation that contributes to deepening the capital market.
This was disclosed by Acting Director General of the Securities and Exchange Commission, Ms. Mary Uduk while speaking with journalists in Lagos, weekend.
According to Uduk, one of the ways of growing and developing the capital market is to ensure that investors are able to receive the benefits of their investments.
“When people invest, it’s because they are expecting some returns. So, we ensure that no one takes your money away in an illegal manner and 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 a number of 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 out 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 to and how long it takes for such complaints to be resolved. For those of the 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 market that is liquid.
She said “For the regulator, what we are concerned 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 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 those are done and market moves up or down there is almost little or nothing we can do about it and that is the essence of investment. When market moves up is an advantage to others and some people to buy. The cardinal of the market is 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 out initiatives in terms of creating a derivatives market, it will help reduce the volatility in our market. Its one of the efforts we are working to ensure we have a more efficient market. She said.