Investor education key to healthy, stable capital market – SEC

The Securities and Exchange Commission (SEC) has emphasised that investor education is a key prerequisite for a healthy market and the development of market confidence.

It added that a well-informed investor base is crucial for the stability and growth of any capital market.

The Director General of the SEC, Dr. Emomotimi Agama, stated this during the opening of the 2024 International Organisation of Securities Commissions (IOSCO) World Investor Week (WIW).

He highlighted that investor education empowers individuals to make informed decisions and safeguard themselves against fraud, Ponzi schemes, misinformation, and excessive risk.

Agama, who was represented by the Executive Commissioner Operations of the SEC, Mr. Bola Ajomale, stated that Nigeria has witnessed increasing participation in the capital market, with more retail investors entering the fold, noting that it also highlights the need to strengthen educational efforts, especially in this era of digital finance.

He said, “As financial products become more complex and technology-driven, from fintech innovations to cryptocurrency trading, it is critical and responsible for stakeholders to commit to equipping investors with the knowledge to navigate these markets confidently and responsibly.

“World Investor Week provides a platform for us to reinforce this commitment. Throughout this week, we will engage with investors, discuss best practices, and focus on improving transparency and accountability in financial markets. I encourage all participants to take these opportunities to learn and share knowledge, so we can continue building a robust, investor-friendly ecosystem,” he stated.

The SEC DG said the focus for 2024 is apt and extremely timeous as it covers Technology and Digital Finance, Crypto Assets, and Sustainable Finance, three critical areas that will shape the future of global capital markets, adding that the reward potential is unimaginable but the risks are equally enormous.

“The rise of technology in finance is reshaping the way capital markets function, creating opportunities for greater efficiency, transparency, and inclusion. Fintech solutions are democratizing access to financial services, reducing transaction costs, and enabling faster, more secure operations across the market. In Nigeria, the rapid adoption of mobile technology and digital payments demonstrates the immense potential for growth in digital finance.

“As we embrace these innovations, the SEC assures the capital market that we work assiduously with other regulators to adopt frameworks that protect investors. Our desire is to ensure that technological advancements are deployed responsibly and that market participants understand the risks associated with digital finance, such as cybersecurity threats and data privacy concerns”.

The DG said Nigeria has emerged as a key player in crypto markets, particularly in peer-to-peer transactions stating that the space remains highly volatile, and investor protection is paramount.

He said the SEC has developed and released frameworks for regulating Virtual Asset Service Providers (VASPs) and shall continue to address risks such as fraud, money laundering, and market manipulation, while also fostering innovation in a safe and transparent manner.

According to him, “Our frameworks balance the need to encourage innovation within a safe, regulated environment whilst maintaining investor protection. Crypto assets must be subject to clear regulatory oversight that ensures market integrity without stifling growth.

“Through this approach we have created a Regulatory Incubation Programme within which new technologies and digital assets can be tested and approved for public use. The SEC has also developed an Accelerated Regulatory Incubation Programme specifically to encourage non-registered crypto operators (who are currently extremely high risk and banned) to present themselves for regulatory oversight. I must also add that as the aforementioned framework continues to evolve, enforcement action against illegal crypto platforms, ponzi schemes and market abuse will significantly increase in severity”.

He said the third focal area, which is sustainable finance, is not only a global priority, but it is also a pressing issue for Nigeria as environmental, social, and governance (ESG) factors are becoming more important in investment decisions.

He said as Nigeria celebrates the growth of the Nigerian market, stakeholders must also acknowledge the evolving risks as global markets are interconnected, and Nigeria is not insulated from economic volatility,
cybersecurity threats, and financial crimes such as fraud and market manipulation.

“We as a unified capital market join IOSCO in our commitment to fostering collaboration across borders to ensure that regulatory frameworks keep pace with these developments. You might note that so far, we have demonstrated leadership by implementing progressive regulations to protect investors and ensure market integrity.

“As we embark on this World Investor Week, let us remember that the responsibility for a strong
and inclusive market lies with all of us – regulators, market participants, and investors alike. We firmly believe in the power of collective action. The Securities and Exchange Commission of Nigeria
shall continue to work with all exchanges and stakeholders in the Nigerian Capital Market to ensure that we uphold the highest standards of transparency, fairness, and investor protection,” he added.

In his remarks Governor Babajide Olusola Sanwo-Olu said Lagos, as the commercial hub of Nigeria, stands at the intersection of innovation, technology, and finance as the state has always embraced forward-thinking solutions to foster economic growth, drive financial inclusion, and create wealth.

Represented by the Deputy Chief of Staff, Governor’s Office, Mr. Sam Egube, Sanwo-Olu said the emergence of digital assets and the increasing role of technology in finance present both unprecedented opportunities and challenges, and it is imperative that we engage thoughtfully and strategically with these developments.

“Cryptocurrencies, blockchain, and digital assets are transforming how we understand value, transaction mechanisms, and investments. While their potential to democratize finance is significant, we must also be mindful of the risks they introduce, particularly in areas of regulation, security, and investor protection. The role of IOSCO in advancing investor education, regulation, and market integrity is therefore crucial as we transition into this new financial era.

“Sustainable finance is another key pillar of this event’s theme, and rightly so. As we seek to address global challenges such as climate change, inequality, and economic instability, it is clear that finance must be a force for good. Investments in green technologies, renewable energy, and socially responsible businesses are not only the right thing to do, but they are also sound business strategies for long-term value creation.

Sanwo-Olu said in Lagos, the government is committed to fostering an environment that supports sustainable development, encourages responsible investments, and promotes the well-being of both current and future generations.

“As we embark on this important week of discussions and learning, I encourage us to keep in mind the dual goals of fostering innovation and ensuring investor protection. Technology is moving fast, but we must ensure that no one is left behind. Through events like this, we can build a resilient, inclusive, and sustainable financial system that benefits everyone,” he stated.

READ MORE FROM: NIGERIAN TRIBUNE