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SEC approves rules for Investor Protection Fund

By on January 24, 2014

The Securities and Exchange Commission has approved the proposed rules to govern the Investor Protection Fund, according to the Nigerian Stock Exchange.

A statement posted on the NSE website said the bourse received SEC’s approval of the IPF rules on Wednesday.

According to the NSE, Part XIV of the Investment and Securities Act 2007, (CAP 124, LFN, 2004) (“ISA”) requires the Nigerian Stock Exchange to establish and maintain an investor protection fund.

The fund is meant to provide compensation for investors that have genuine claims of losses against dealing member firms.

The claims of losses are expected to revolve around such things as “insolvency, bankruptcy or negligence of a dealing member firm of a securities exchange or capital trade point.”

The fund is also expected to compensate investors that have genuine claims resulting from “defalcation committed by a dealing member firm or any of its directors, officers, employees or representatives in relation to securities, money or any property entrusted to, or received by the dealing member firm in its course of business  as a capital market operator.”

Last week, the Chief Executive Officer, NSE, Mr. Oscar Onyema, had said the Exchange was awaiting SEC approval of the rules for the IPF, adding that the fund would commence operations later this year, after the approval might have been given.

According to him, once the IPF becomes operational, it will aid the NSE to boost investor confidence and in its quest to ensure that capital market operators avoid market infractions.

Following the approval of the rules, the Exchange said, “This is a welcome development, which will enable the Board of Trustees of the Investor Protection Fund to carry out the duties for which the fund was established, in line with the Investment and Securities Act 2007 and the approved rules.”

Going forward, the NSE said it looked forward to continuing to work closely with the fund’s Board of Trustees to sustain and promote investor confidence in the Nigerian capital market.

The NSE had in 2012 constituted a nine-member Board of Trustees for the fund.

The board, which comprises shareholders, stockbrokers and registrars, has Gamaliel Onosode as chairperson.

The NSE CEO and the Managing Director, Central Securities Clearing System, Mr. Kyari Buka, are also members of the board.

 

[Punch]