Yes, it’s not looking very good but we have put measures in place to ensure our market don’t shut down. Presently trade is going on in the various exchanges that make up our market. The Nigerian Stock Exchange is continuing with trading, the FMDQ and all the Exchanges are actually continuing and everything is going well.
In the past we talked a lot about FinTech or Financial Technology and how it has disrupted the market but now its COVID-19 that has so disrupted the market, disrupted everything the way it is and therefore as humans we have to adapt to be able to ensure that our lives continue and not allow COVID-19 to put our lives on hold, and therefore we are leveraging on technology.
Initially people were afraid of technology but right now it has become a saving grace given the COVID– 19. So most of us are leveraging technology, we have put our Business Continuity Plan (BCP) in process, staff are working remotely, we are interacting with market operators they are also working remotely. Our staff are equipped to be able to continue to work remotely and support the market in every area. We have also issued circulars to capital market operators guiding them, also on how we expect that the market would remain open and that the market continues to function seamlessly.
Like you know we use phones, we have had meetings using phones, in the last three days we use phone to hold meetings for 2 to 3 hours both my staff and other market operators. We use Zoom to also have meetings if we want to see each other and so many other ways.
We are happy with the way the Capital Market is going, we have released about three circulars concerning the action against the COVID-19. One of them was to tell the entire Capital Market Operators people who we regulate to give us report on their Business Continuity Plan and processes (BCP) and as you can see the market is trading and everyone has activated their BCP the stock exchanges, the clearing houses and even the brokers, all capital market are all operating with their BCP.
We have also asked the public companies to make sure that they continue to send out information that is their responsibilities to make sure that investors are informed so we have said that they should give out information on how COVID– 19 would affect them if possible make forecast and outlook to let investors know how the pandemic can affect their operation volatility and others.
We are on our part, we have put up email address that people can use to send returns, applications they are all on our websites so what we have done is for the Capital Market to continue to work while we are on lock down. Se we have advised everyone to under our purview and investors on how to invest.
What role is remote trading playing for you at the SEC and how supportive is the Commission towards that?
Most of the exchanges particularly when you talk of the Nigerian Stock Exchange, FMDQ, NASD and the new Commodities Exchanges have all activated their remote business plan and all of them are trading remotely. Also an exchange like the NSE over the years had spent a lot of money to put in place a lot of technology related infrastructure and right now is beginning to reap the fruit of all of that investments and same with other exchanges. All of them have put in their BCP in place and are trading remotely, for instance all of them have moved staff very close to their offices where they are able to support the market, the dealers, issuers and trade remotely as well as ensuring that investors reach their investments and also make investments decisions.
The Commission also issued circulars to ask the exchanges and other market operators to activate their remote trading processes to be able to support the market and also ensure to let the Commission know what their plans are to be able to support the market and business to continue so that the market does not suffer in anyway.
The onset of the pandemic saw big declines in market performance, how can confidence be restored to the Nigerian market?
There is a gap in every market not just ours. I am sure you have been following the foreign markets in the US, Europe and Asian market. They have had many up’s and downs during this period and I would even say that in the past two weeks our market has been more resilient than most. So talking about confidence in this period of COVID-19, we have not done badly, our trading has continued but, for confidence over time, the SEC has been doing a lot to ensure that we have a return to robust investor confidence. We lost some confidence in 2007/08 when there was the crisis, we had a lot of the retail part of the market exit that market. But that was because we did not have a lot of things in place but now, we have many measures we have put in place to improve market confidence.
One of them is the e-dividend system we have put in to ensure investors get their dividends directly the dividend don’t have to be routed through stockbrokers any longer. We also have continued to educate the market on how to approach the market, we have continued to ensure that market conduct have improved, we are working to deepen the market to ensure there is improved confidence. We are optimistic that confidence in the market will continue to improve.
What is the SEC doing to protect investors?
For investor protection, we ensure that no one takes your money away in an illegal manner and the protection is not that somebody will compensate you. A regulator will also tell you try to diversify your portfolio, try to talk to experts and their different vehicles of investments so in one way or the other they will have effect of the market cushion on their wealth.
For the regulator what we are interested is do you have an efficient market, do you have a liquid market so that transaction cost will be reasonable, so that someone does not take advantage of another person. But market can move up or move down all we can do as a regulator is to ensure that people do appropriate disclosure so that I don’t have one information and hide it and then use that information at your detriment. But if all those are done and market moves up or down there is almost little or nothing we can do about it and that is the essence of investment.
But for investor protection which is we ensure that nobody takes your money away in an illegal manner, but the protection is not that somebody will compensate you when the market moves down. But the regulator will always tell you to try to diversify your portfolios, try to talk to experts and sometimes there are different vehicles of investments so that investors one way or the other they will have the impact of the market cushioned on their wealth.
When market moves up it is an advantage to some people and when it comes down it is also an advantage for some people to buy. The cardinal of the market is buy low and sell high, so when it moves up there some people who are ready there to take profit and that is why when we say market goes down on the back of investors taking profit. So whichever way the market goes, as long as investors monies are not taken illegally the cyclical movement of market is just a natural way that a capital market operates.
That is where we need the press to support out initiatives in terms of creating a derivatives market, it will help reduce the volatility seen in our market. It’s one of the efforts we are making at ensuring we have a more efficient market. If we have a market where derivatives are working, we can short sell, we have securities lending and all that, we will have a much more efficient market and we will not see the spikes we are seeing now.
During the last CMC, the Investor Education Committee came up with quite a few things. They are doing few initiatives, that they are doing and continue to do, the first as you may know is the inclusion of Capital Market Studies in basic and advance school curriculum, that is the secondary and primary school. So the thrust now is to begin to prepare teachers guidelines, and also we are now looking at the university curriculum so that people understand capital market from the basics as they go through their education.
Another thing is the e-dividend issue, so far we have about 2.8 million accounts mandated for e-dividend and we are looking to increase that and also, we want more people to be aware of what it is and that you can get your dividends directly into your own account, we hope that or we believe that will increase or improve market confidence and make a lot of retail investors return to the market.
We are also introducing new products, as you may be aware we are trying to build a commodities market. We believe that Nigeria is ripe for vibrant and a robust commodities market. So there has been engagement with the stakeholders so such as the Standard Organization of Nigeria, to establish standards for our commodities, so that we can create market and build market for it. We have a commodities ecosystem world group that has come up with all those very incitement recommendations on what we need to do to have a good commodities market.
We are also looking at the derivatives market, the rules have been exposed to the market and it would soon be approved and out, so very soon we hope to have an exchange traded derivatives in the market.
So all these is to deepen the market, improve liquidity in the market, make the market more vibrant, make the market more attractive for investors.
What are your thoughts on the Commission’s zero tolerance to Ponzi schemes in Nigeria?
Ponzi scheme is prohibited by the provisions in Section 38(1) of the ISA that does not allow people that are not registered to collect money from the public or authorized by SEC to do so. Therefore, whoever collects, money from the public without being registered by the SEC, first has done that illegally. In terms of Ponzi scheme, it is different from people just collecting money illegally, but Ponzi schemes are those who collect money from people and promise them mouth-watering interest which are not sustainable.
Some of them like the MMM, Jung-Dong and so many of them and others that have collected money from the public in the past promising them those kind of interest that their business fundamentals do not support. So they collect money from the first set of people and pay them mouth-watering interest, by the time they don’t have people bringing money again they are not able to pay subsequent people that they are collecting money from and before you know it they close their doors and disappear. People will start crying that the Commission is not protecting them and therefore we are saying to the investing public that every capital market operator that is licensed to operate in this market must be registered by the Commission and their names are on the website of the Commission.
We will continue to work to protect investors and also to ensure the promoters of Ponzi schemes are made to face the full wrath of the law and the Commission is stepping up its regulatory oversight to ensure that such illegal entities are sealed off quickly.
Ponzi Schemes are illegal and that is why we keep warning the public about the dangers of these outfits. Even on our website we have videos enlightening the public on the dangers of Ponzi schemes. Once we have information of anyone engaging in illegal fund management business, our enforcement department working with our police unit, shuts them down and the promoters are handed over to the relevant law enforcement agencies for further actions.
Recently, the Commission released a list of 12 unlawful/unlicensed investment schemes which are: Loom Nigeria Money, Box Value Trading Company Ltd, Now-Now Alert, Flip Cash Investment, Result Investment Nigeria Limited, Helping Hand and Investment and No Failure Development and Empowerment Nig. Ltd
Others are MBA Forex and Investment Ltd, Federate Investors Trading Company, Jamalife Helpers Global Ltd, Flexus Global Solutions and Investment Ltd, United Capital Investment Company Limited.
The listed outfits are not registered to carry out fund management functions of any sort, stressing that those who stubbornly patronize them would end up burning their fingers. We are therefore advising the general public to distance themselves from such schemes, as anyone that subscribes to these illegal activities, does so at their own risk.
Many patronize Ponzi schemes probably due to the fact that they are not aware of opportunities in the capital market. What are some of the options available in the market?
The capital market has been properly positioned to attract Nigerians and other investors and provide benefits to those who invest therein and the SEC has sustained its investor education programme to assist people understand whatever issues they have around the capital market.
But besides that, there are new products coming up every day in the Nigerian capital market. We have a lot of ethical funds, one of the safest areas to invest in is in Mutual Funds, Collective Investments Schemes and we encourage Nigerians to be part of these and others”.
The SEC is presently undertaking various initiatives to make the capital market more user-friendly such that people can participate in it with greater ease, comfort and convenience.
There is the added and all-important purpose of ensuring that the gains of your participation, be these dividends, proceeds from share sales/transfers, etc. accrue to you seamlessly, without sweat and in the shortest time possible. The purpose is also to ensure that investors do not fall victims to the antics of fraudsters who purport to be able to double any amount of money you make available to them as investment value.
People need to know that it’s easy to open a money market account, a mutual fund account, get stocks and things like that. We want the market to be easier, more accessible and we also want to have more products. We want a deeper market and we believe that with these combinations, we will reduce the number of Ponzi schemes coming up and reduce the number of investors putting their money into Ponzi schemes.