Acting Executive Director, Securities and Exchange Commission, Ms. Mary Uduk, explains to IFEANYI ONUBA what the commission has done to protect the capital market from the negative impact of the COVID-19 pandemic, among other issues
The country has been stuck for more than two weeks due to the coronavirus pandemic, what impact does this have on the Nigerian capital market?
It is not very beautiful, but we have put in place measures to ensure that the market does not close. Currently, trade takes place in the various exchanges that make up our market.
The Nigerian Stock Exchange continues to trade, the Financial Market Exchange and all stock exchanges continue and everything is going well.
In the past, we’ve talked a lot about financial technology and how it has disrupted the market, but now its COVID-19, which disrupted the market so much, has turned everything upside down.
Therefore, as humans, we must adapt to be able to guarantee that our lives continue and not allow COVID-19 to suspend our lives. So we are betting on technology.
At first, people were afraid of the technology, but right now, it has become a saving grace given the COVID19 pandemic. So most of us exploit the technology; we have implemented our business continuity plan, staff work remotely, we interact with market operators, they also work remotely.
Do you have adequate equipment for working at a distance, since the lockout occurred unexpectedly?
Our staff is equipped to be able to continue working remotely and support the market in all areas. We have also issued circulars to capital market operators to guide them on how we expect the market to remain open and the market to continue to operate transparently.
As you know, we use telephones, we have had meetings using telephones, in the past three days we have used the telephone to hold meetings for two to three hours, including my staff and d ‘other market operators. We use Zoom (application) to also have meetings if we want to see each other and in many other ways.
So far, are you satisfied with the way the capital market is performing given the current foreclosure caused by the COVID-19 pandemic?
We are satisfied with the development of the capital market, we have published about three circulars concerning the action against COVID-19.
One of them was to tell all of the capital market operators to report to us on their business continuity plan and processes and as you can see, the market is trading and everyone has activated his PCA. Stock exchanges, clearing houses and even brokers, and all capital market operators all operate with their BCPs. We also asked public companies to ensure that they continue to send information. It is their responsibility to ensure that investors are informed.
So we said they should give information on how COVID19 would affect them if possible. They must also make forecasts and outlooks to let investors know how the pandemic may affect their functioning in terms of volatility and the like. We have also set up an email address that people can use to send returns. So what we have done is that the capital market continues to operate while we are locked out and we have advised everyone in our jurisdiction and investors how to invest.
What role does distance trading play for you at the SEC and to what extent is the commission supportive of this?
Most exchanges, especially when you talk about the Nigerian Stock Exchange, the FMDQ and the new commodity exchanges, have all activated their trading plans remotely and all are traded remotely.
In addition, an exchange like the NSE over the years had spent a lot of money to set up many technological infrastructures and, at the moment, is starting to reap the benefits of all these investments and similarly with other exchanges.
All have set up their BCPs and trade remotely, for example, they have all moved staff very close to their offices where they are able to support the market, brokers, issuers and distance trading as well as s ” ensure that investors reach their investments and also make investment decisions.
The commission has also issued circulars to ask exchanges and other market operators to activate their remote trading processes in order to support the market.
There is no doubt that the impact of COVID-19 would affect the level of investor confidence in the capital market, how do you manage this?
There is a gap in every market, not just in ours, I’m sure you’ve followed foreign markets in the United States, Europe and Asia.
They have experienced many ups and downs during this period. I would even say that in the past two weeks, our market has been more resilient than most markets. So, speaking of confidence in this COVID-19 period, we did not do badly, our exchanges continued but, for confidence over time, the SEC has done a lot to ensure that we regain confidence solid investor base.
We lost a little confidence in 2007/08 when there was a crisis, we had a large part of the retail in the market of this market. But it was because we didn’t have many things in place. But now we have put in place many measures to improve market confidence.
What are some of these measures?
One of them is the electronic dividend system that we have put in place to ensure that investors get their dividend directly. The dividend must no longer be routed through securities brokers. We have also continued to educate investors on how to approach the market, we have continued to ensure improved market conduct, we are working to deepen the market to ensure increased confidence. We hope that confidence in the market will continue to improve.
What is the SEC doing to protect investors from the negative impact of COVID-19?
For investor protection, we make sure no one illegally takes your money from you and protection is not that someone will compensate you. A regulator will also tell you to try to diversify your portfolio, to try to speak to experts and their different investment vehicles so that in one way or another they have a market cushion effect on their wealth .
For the regulator, what interests us is that you have an efficient market, do you have a liquid market so that the transaction cost is reasonable, so that someone does not take advantage of another person? But the market can go up or down, all we can do as a regulator is to make sure that people make an appropriate disclosure so that I don’t have information and I hide it and then i use this information to your detriment.
But if all of this is done and the market goes up or down, there is almost nothing or nothing we can do about it and that is the essence of investing.
When it comes to investor protection, we make sure that no one takes your money illegally, but the protection is not that someone will compensate you when the market goes down. But the regulator will always tell you to try to diversify your portfolios, to try to speak to experts and sometimes there are different investment vehicles for investors in one way or another to have the impact of the market. amortized over their wealth.
When the market goes up, it is an advantage for some people and when it goes down, it is also an advantage for some people to buy. The cardinal principle of the market is to buy low and sell high, so when it goes up, there are people who are ready to make profits and that is why when we say that the market drops on the backs of the investors who profit.
Whatever the direction of the market, as long as the investors’ money is not taken illegally, the cyclical movement of the market is only a natural means of functioning of a capital market.
What measures has the commission taken to increase the level of liquidity in the Nigerian capital market?
We believe that Nigeria is ripe for a dynamic and robust commodity market. So there has been engagement with stakeholders such as the Nigeria Standards Organization, to establish standards for our commodities, so that we can create a market and create one.
We have a Commodities Ecosystem World Group which has made some interesting recommendations on what we need to do to have a good commodity market. We are also looking at the derivatives market, the rules have been exposed to the market and it would soon be approved and implemented. So very soon we hope to have an exchange traded derivatives market.
All of this involves deepening the market, improving market liquidity, making the market more dynamic, making the market more attractive to investors.
Since taking up this position, the Ponzi scheme has been a major area to which you have granted zero tolerance. How did you solve this problem?
The Ponzi scheme is prohibited by the provisions of Article 38 (1) of the Law on Investments and Securities. The law does not allow unregistered persons to collect money from the public or authorized by the SEC to do so. Therefore, anyone who collects money from the public without being registered with the SEC first did so illegally.
When it comes to the Ponzi scheme, it is different from the people who illegally collect money, but the Ponzi schemes are the ones that collect money from people and promise them enticing interests that are not sustainable. Some of them like MMM, Jung-Dong and so many others and others who have collected money from the public in the past promising them that kind of interest that their business fundamentals did not support.
They therefore collect money from the first group of people and pay them attractive interest. By the time they run out of people bringing in money, they are unable to pay the following people for whom they are collecting money, and before you know it, they close their doors and disappear .
People will start crying that the commission does not protect them, therefore, we are telling the investing public that every capital market operator authorized to operate in this market must be registered by the commission and have their name on the website. of the commission.
We will continue to work to protect investors and to ensure that promoters of Ponzi schemes are faced with the wrath of the law and the commission is stepping up its regulatory oversight to ensure that these illegal entities are quickly isolated.
Ponzi schemes are illegal and that is why we continue to warn the public of the dangers of these outfits. Once we have information about anyone engaged in illegal fundraising activities, our law enforcement department working with our police unit, closers and promoters is turned over to the appropriate law enforcement agencies for further investigation. other actions. We therefore advise the general public to distance themselves from such devices, as anyone who subscribes to these illegal activities does so at their own risk.
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