The Nigerian Stock Exchange on Wednesday informed investors that the Securities and Exchange Commission had approved rules to govern the Investor Protection Fund.
The Chief Executive Officer, NSE, Mr. Oscar Onyema, who disclosed this on Wednesday, said the move would enable the Board of IPF to commence work, which will boost investor confidence.
He spoke in Lagos at an ‘investors’ clinic’ the NSE organised for registered shareholders’ associations.
The IPF, a World Bank-funded scheme aimed at boosting confidence in the equities market, is meant to provide compensation to investors who are defrauded.
Capital market regulators expect that the fund, said to be up to N600m, will attract more investors to the NSE and increase the depth of the capital market.
Onyema said, “This (approval) is a welcome development which will enable the Board of Trustees of IPF to carry out the duties for which the Fund was established, in line with the Investment and Securities Act 2007 and the approved Rules. The Exchange continues to look forward to working closely with the Fund’s Board of Trustees to sustain and promote investor confidence in the Nigerian capital market.”
Onyema, who told investors that the impressive performance of the NSE over the last two years was largely due to improved market regulation, said the Exchange would maintain zero-tolerance to market infractions.
“We have proposed several rules to codify the accepted mode of engagement in our market. These rules are available on our website,” he said, adding that the Exchange would remain committed to investor education.
The Head, Regulation and Legal Division, NSE, Tinuade Awe, in a presentation on investor protection efforts by the NSE, said the Exchange’s goal was to ensure that all investors were protected.
According to her, as a result of the drive, the NSE has implemented reforms, upgraded technology and reviewed (and introduced) rules to ensure better governance and transparency when it comes to activities on the Exchange.
She told the shareholder groups that through initiatives such as the IPF, transformation of market operators, review of rules and regulations concerning such things as Annual General Meetings and local and foreign collaboration with regulators, their investments were better protected.
Awe explained that the NSE had also strengthened its market surveillance, ensuring daily monitoring of trading activities in the market, creation and analysis of alerts for unusual trading behaviour and preparation of surveillance reports on daily, weekly, monthly and quarterly basis.
She added that the new trade alert system, X-Alert, introduced by the NSE, which provides investors with details of transactions on their accounts via SMS, among other things, “serves as an effective fraud alert in cases of unauthorised transactions on accounts.”
The retail investor clinic is part of the investor education initiatives by the NSE and shareholders at the event used the opportunity to raise several issues, which they said put their investments at risk.
Some of the issues raised include the failure of some companies to hold AGMs, which leaves their shareholders with little chance of expressing their views on how the company was being run.
The shareholders also expressed concern that the retail investors were not being carried along in the transformation of the Exchange.
The President, Progressive Shareholders Association of Nigeria, Mr. Bright Okezie, expressed concern that the views of minority shareholders were often ignored when it came to issues such as capital reduction and the likes. He also said there was the need for regulators to engage the shareholders more frequently before introducing new initiatives such as the X-Alert for which they would be required to pay.
“We have been talking about corporate governance, and there is the need for the NSE to uphold good governance in all they do,” he said.
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