SEC Sees Opportunity in Non-Interest Capital Market Segment To Grow The Economy
The Non-Interest Capital Market is growing at an exponential rate in Nigeria and has the potential to attract a large pool of untapped investors with apathy to conventional instruments, the Securities and Exchange Commission (SEC) has said.
Non-interest finance is a series of financial products developed to meet the requirements of a specific group of investors.
SEC’s quest for in-depth knowledge in non-interest capital market products, operations and services is underscored by the recent increase in market activities such as the entrance of more assets’ managers, investment advisers, real estate investment trusts and advisory experts to provide new asset classes for Nigerian investors.
Describing the non-interest capital market sector as a unique asset that is capable of deepening the Nigeria’s financial system and stimulating economic growth, the Director-General of the Commission, Lamido Yuguda, said the level of activity in Non-Interest (Islamic) capital market affirms the overwhelming acceptance of NICM products by the investing public.
He spoke at a Joint IFSB/SEC Nigeria Virtual Seminar on Investor Protection and Transparency in Islamic Capital Markets, held at the weekend.
Yuguda added that recently, the capital market witnessed the entrance of institutions offering Islamic capital market services/products and also witnessed the issuance of the Federal Government of Nigeria into the Sukuk market with latest issuance of FGN SUKUK, which was over-subscribed by over 400 per cent.
This he said, further buttressed the need to enhance the SEC’s investor protection mechanism in order to ensure transparency in the market.
The SEC boss also stated that investor protection is the principal plank of regulation and transparency, and a building block that enhances the growth of the capital market.
While noting that knowledge gap still exists between players and investors in the capital market, Yuguda advocated for more transparency among operators, stressing that
the risks faced by investors requires reasonable level of protection by the regulator in order to build confidence and trust in the market.
“Capital markets all over the world thrive on trust. It is believed that enhancement of investor protection and increased transparency will have a multiplier effect on investments and sustainable growth of the economy,” he declared.
The SEC DG said further that, to ensure investors are well protected and boost confidence in the Nigerian capital market, the Commission put in place a framework for complaint managements to fast-track and streamline dispute resolution process in the market.
Yuguda said, “It is worthy to also note that the 10-year strategic Masterplan (2015-2025) for the Capital Market includes a section on NICM that recommends various initiatives aimed at developing this sector. While some of these activities and programmes have been implemented, a lot more work is ongoing to unlock the full potential of Non-interest Capital Market.
“It is a well-known fact that the pandemic has brought about a new normal to the global economies – including the Nigerian Capital Market, hence this Seminar couldn’t have come at a better time.
“The need to promote and increase awareness of investor protection mechanism and transparency requirements are considered essential to engendering investor confidence and trust in the financial system, which is crucial for the growth and development of the market”.
With respect to NICM, he said the provision of two levels of shariah review and certification is meant to further serve as added measure towards investor protection. This is coupled with the requirement for continuous review\certification of the shariah expert throughout the tenor of the transaction.
He said, “We are happy to note that Non-Interest financial activities are developing exponentially across all sectors of the Nigerian Financial System. Indeed, we expect that the Market will soon witness substantial investment from the pension industry which will be a game changer that would spur more issuances of NICM by corporates and other categories of issuers”.
Yuguda said the SEC Nigeria has not relented in its efforts to discharge its primary mandate of regulating and developing the Nigerian Capital Market; protection of investors has been one of our key focus.
Numerous initiatives being implemented in this regard include the establishment of the National Investor Protection Fund (NIPF) aimed at compensating investors who incur losses arising from the insolvency, bankruptcy or negligence of a Capital Market Operator.
Others are e-Dividend registration and payment system, Dematerialisation and Direct Cash Settlement system, all aimed at ensuring an efficient process of securities transaction and elimination/minimizing cases of unclaimed dividend.
The purpose of the seminar, which is the second collaboration between the SEC and IFSB in 2021, was to enlighten stakeholders on the protections available to investors and of the level of transparency inherent in the Non-Interest Capital Market (NICM).
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