SEC unveils N5b investor-protection fund
The Securities and Exchange Commission has set aside N5 billion National Investors Protection Fund (NIPF) to compensate investors for pecuniary losses arising from the insolvency, bankruptcy or negligence of non-broker/dealer capital market operators.
Already, the commission has provided the take-off grant for the initial operation of the fund.
The Director, General, SEC, Mounir Gwarzo, who stated this at a Capital Market Committee (CMC) press briefing held in Lagos at the weekend, explained that the fund is a temporary measure to cushion the effect of losses market operators encounter in the market.
Gwarzo noted that with the NIPF’s establishment, Nigeria has joined an elite group of countries with similar kind of investor compensation scheme
“This is a very historic day for the Nigerian capital market and indeed the entire economy because with the NIPF’s establishment, Nigeria has joined an elite group of a handful of countries with this kind of investor compensation scheme.
“While dozens of jurisdictions have functional investor protection funds run mainly by Exchanges and their dealing members, Nigeria is now among only a few countries to have a National Investor Protection Fund, to compensate investors for pecuniary losses arising from the insolvency, bankruptcy or negligence of non-broker/dealer capital market operators.”
He noted that since the 2008 financial crisis in which the Nigerian stock market lost about 70 per cent of its value, investor confidence was eroded, while the apathy still impacts the state of the market.
This, coupled with the prevailing macroeconomic environment, he said, has been a major impediment to market recovery.
“ The SEC which has a dual mandate of regulating and developing the capital market has put in place several reform measures to restore investor confidence and attract investors back to the market. Today we are here to commemorate the culmination of one of those initiatives,” he added.
He pointed out that the 10-year Nigerian capital market Master Plan, which has become SEC’s guiding document, considers the investors’ protection fund as a critical factor for restoring and sustaining investor confidence, adding that this has necessitated the urgent establishment of the fund.
Gwarzo noted that the NIPF and other capital market initiatives have received priority attention since the new Management at SEC assumed duty, while assuring that the Commission would continue to take its investor protection mandates with all seriousness.
“Going forward however, the entire capital market community should come together to discuss details of how we can all contribute to continued funding for this critical market vehicle.”