The Securities and Exchange Commission has set aside N5 billion National Investors Protection Fund (NIPF) to compensate investors for pecuniary losses arising from the insolvency, bankruptcy or negligence of non-broker/dealer capital market operators.
The Director General of the Securities and Exchange Commission (SEC), Mounir Gwarzo stated this at a Capital Market Committee (CMC) press briefing held in Lagos on Friday, explained that the fund is a temporary measure to cushion the effect of losses market operators encounter in the market.
With the NIPF's establishment, Gwarzo noted that Nigeria has joined an elite group of countries with similar kind of investor compensation scheme.
"This is a very historic day for the Nigerian capital market and indeed the entire economy because with the NIPF's establishment, Nigeria joins an elite group of a handful of countries with this kind of investor compensation scheme.
"While dozens of jurisdictions have functional investor protection funds run mainly by Exchanges and their dealing members, Nigeria is now among only a few countries to have a National Investor Protection Fund, to compensate investors for pecuniary losses arising from the insolvency, bankruptcy or negligence of non-broker/dealer capital market operators."
He noted that since the 2008 financial crisis in which the Nigerian stock market lost about 70 per cent of its value, investor confidence was eroded, while the apathy still impacts the state of the market.
This, coupled with the prevailing macroeconomic environment, he said, has been a major impediment to market recovery. He pointed out that the 10-year Nigerian capital market Master Plan, which has become SEC's guiding document, considers the investor protection fund as a critical ingredient for restoring and sustaining investor confidence, adding that this has necessitated the urgent establishment of the fund.
Gwarzo noted that, the NIPF and other capital market initiatives have received priority attention since the new management at SEC assumed duty.
Gwarzo added that the Verification Committee will quickly commence its assignment by scrutinizing the already processed compensation claims so that hopefully we may soon begin to see beneficiaries from the Fund emerge.
