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Tuesday, May 17, 2022

SEC sees Pension fund investing big in Islamic Capital Market soon

The non-interest (Islamic) capital market (NICM) will soon witness substantial investment from the pension industry, according to the Director-General of the Securities and Exchange Commission (SEC), Lamido Yuguda.

Yuguda said the impending investment in the sector will be a game-changer that would spur more issuances of NICM products by corporates and other categories of issuers.

The chief, who spoke at a virtual seminar on “Investor Protection and Transparency in Islamic Capital Markets”, noted that the level of activities in non-interest (Islamic) capital market currently being witnessed in Nigeria attests to the overwhelming acceptance of products offered in the market by the investing public.

He said this further underscored the need to enhance the Commission’s investor protection mechanism in order to ensure transparency in the market.

Non-interest capital market, he said, has huge potential in Nigeria, adding that it has the prospect of attracting a large pool of untapped investor base with apathy to conventional instruments, to participate in the capital market as well as the existing investors who seek to diversify their portfolio.

He said the level of activity in non-interest (Islamic) capital market that is currently being witnessed in the country affirms to the overwhelming acceptance of such products by the investing public.
He stated that recently, the market witnessed the entry of institutions offering Islamic capital market services/products as well as witnessed issuances of the Federal Government of Nigeria (FGN) into the Sukuk market with latest issuance of FGN Sukuk oversubscribed by over 400 percent.

The SEC DG stated that investor protection is the principal plank of regulation and transparency, a building block that enhances the growth of the capital market adding that the knowledge gap that often exists between the market players and investors demand for more transparency, and the risks faced by investors requires reasonable level of protection by the regulator in order to build confidence and trust in the market.

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According to him, capital markets all over the world thrive on trust and is believed that the enhancement of investor protection and increased transparency will have a multiplier effect on investments and sustainable growth of the economy.
In ensuring that investors are well protected, Yuguda said a framework for complaint management was put in place to fast-track and streamline the dispute resolution process in the market.

This is to foster and secure investors’ confidence in the market, he said.
With respect to NICM, he said the provision of two levels of shariah review and certification is meant to further serve as added measure towards investor protection.

This is coupled with the requirement for continuous review/certification of the shariah expert throughout the tenor of the transaction.
He said non-interest financial activities are developing exponentially across all sectors of the Nigerian Financial System.

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