Unstable financing and capital operators sharp disagreement over operational strategies have stalled the take-off of the Nigerian Stock Exchange (NSE) Investor Protection Fund (IPF).
IPF, re-inaugurated in 2012 by the NSE, was designed to compensate investors’ loses occasioned by bankruptcy, insolvency, negligence or wrongdoing of stock-broking firms and to boost investors’ confidence in the nation’s bourse.
Sources close to the NSE management and council told the News Agency of Nigeria (NAN) in Lagos that “it would be impossible for the fund to take-off without sustainable contributory pool of funds”.
“IPF as presently conceived needed to be restructured to ensure stability and prompt repayment of verifiable claims before kick-off,” he said.
According to the source the fund cannot be sustained the way it was structured, adding that market regulators and operators need to agree on the fund’s contributory ratio to ensure sustainability.
The source, who described the current structure of the fund as faulty, said that it would be impossible to settle outstanding claims in the market.
He said that capital market claims would continue to increase, stressing that the recent BGL Group Plc issues brought to the fore the inadequacies of the subsisting IPF.
” The exchange needs to come up with strategies on ways to grow the fund to settle both old and new issues in the market to boost investor confidence,” he said.
Oscar Onyema, NSE Chief Executive Officer, had during the 2014 market review in January, said that 343 claims were approved in December 2014 for payment by the IPF Board of Trustees.
He said that the first and second batches of claims verified and approved under the rules of IPF were 343.
Onyema said that payment would commence soon after verification of claimants identities by an external consultant engaged by IPF Board of Trustees.
But, Olufemi Shobanjo, NSE Head, Broker Dealer Regulation, told NAN that the IPF board of trustees on Dec. 19, 2014 selected a firm of consultants to provide services for the verification of the identity of investors with eligible claims under the IPF.
Shobanjo said that the firm had been engaged to verify the identity of the 343 eligible investors/claimants or the trustees/administrators of their estates whose claims were eligible for compensation under the IPF.
He said that the purpose was to ensure that the BOT pays the correct people and not imposters.
“The firm has commenced the verification of the 343 claims and, upon completion of the verification exercise, the BOT will commence the process of paying out compensation to eligible investors/claimants/their estate,” he said.
He said that there would be a formal communication when the BOT commences the settlement of claims.
NSE had on Sept.21, 2012, inaugurated the new board of IPF with Gamaliel Onosode as the chairman.
The IPF available data showed that the fund had N625 million as at December 30, 2011.
(NAN)
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