To SEC DG, “We are using all channels to enhance the level of financial literacy across various segments of the Nigerian population. In 2013, we will build on the momentum of the past year, which saw the return of retail investor interest in the stock market. This year, we will continue to advocate and encourage the adoption of collective investment schemes for retail investors. Institutional investors have greater clout in corporate governance and are able to demand greater accountability on behalf of the aggregated interests of unit holders.
“They offer professional asset management and diversification both of which features combine to provide greater safety for retail investors. Leveraging on the fact that we can by innovation reach people who do not have access to orthodox financial products, we have continued to expand the range of available offerings. Early in its life, our Board approved (amended) rules on Sukkuk bonds, Islamic Finance, etc.
“We are also mindful of the challenge many small enterprises face in sourcing capital from the capital markets. Accordingly, in 2013 we will advocate the cohesive partnering of these small firms with private equity and venture capital firms, all of which form part of a very important ecosystem. Venture capital firms are able to provide seed capital to promising start-ups and ultimately position these firms for listing and expansion. Our Board, I am happy to announce, has recently also approved amended rules on Private Equity.
“No doubt the amended listing rules which came into force last year hold huge promises for SMEs. The prospects of a vibrant second tier market (now revamped by the NSE and renamed ASEM), which will soon be launched by the NSE, include the immense complement it will provide to government’s efforts at growth and job creation.”
The Commission’s efforts towards achieving effectiveness will cut across a broad spectrum of key areas including market infrastructure and technology, a more robust enforcement regime, stronger market institutions, and more robust disclosure. The target is to create resilience, structures that can withstand shock, but ones that can also work effectively and match international standards.
“Stronger Enforcement: Internal Reform and Greater Rigour. In 2013, we plan to completely overhaul our internal structures in order to create a more robust enforcement regime. Last year, for the second time, we received technical assistance from the US Securities and Exchange Commission, with far reaching recommendations towards strengthening enforcement mechanisms, both within the Commission and at the market level.
“Under the new regime, which takes effect later thi year, we shall merge the investigation and enforcement functions within the Commission to enable swifter response once infractions are detected, thereby creating efficiencies that serve the end of investor protection. In addition, we are installing advanced technological devices for market surveillance and ensuring more than ever that big-ticket market infractions such as insider dealings are swiftly exposed. We also intend to be more public about the identity of defaulters, what we call “naming and shaming.” There will be no hiding place for violators of the rules of the marketplace.
“The new Board of the SEC has already approved the restructuring of the Administrative Proceedings Committee (APC) of the Commission. The new APC will be empanelled by eminent retired judges and the Director General,” she disclosed further.
On improved disclosure: IFRS and Corporate Governance, SEC said: “As far as the capital market goes, the investor is king. He deserves to be provided all the information he needs to make a decision as to initial investment, as well as continuing investment. More than ever, we are committed to demanding higher disclosure levels, and to impose necessary penalties where issuers and operators fall short of the stipulated standards. We will closely monitor compliance with the 2011 Code of Corporate Governance as well as the IFRS reporting which has taken effect. As much as possible, we will provide needed support to ensure that our market is seen to be fairer, to be more transparent and attractive.”
For capital market operators, the Commission noted the need to ensure that only fit and proper entities play in our market, recognised by key stakeholders. “For example, we are pleased that Association of Stockbroking House of Nigeria (ASHON) is encouraging stockbrokers to prepare for the new requirements that we expect to be effective later in the year after Board approval.
In 2012, we set up an industry-wide committee that included the leadership of CIS/ASHON and the NSE along with SEC, to revisit the issue of capital requirements for brokers. That committee came up with a risk-based model that we believe when approved by our Board will strengthen the brokerage industry. Regulators and operators alike acknowledge that we need strong institutions in the market,” according to the SEC.