What is the launch of this e-dividend portal all about?
We have been asking for this since 20 years ago, SEC has severally issued directives mandating companies to pay into clients account. For certain reasons that has not been done, for the first time in this market we have an excellent arrangement with CBN and NIBSS where they have provided for us their platform to ensure that this becomes possible. The era of you have a dividend of N200 and you have to travel from Gwarzo to Kano city to pay your dividend warrant and it will cost you N300 to make the trip, that period is over, you begin to wonder why you have to spend N300 to pay in a dividend warrant of N200.The issue of dividend being stale and we all know the history of the huge unclaimed dividend we have in the market which ranges between N75billion and some people say N80 billion. It is all because people do not have the opportunity to claim their own dividends, with this platform, the issue of unclaimed dividend will be a thing of the past. Let he commend the excellent collaboration between the CBN and NIBSS, without them; we will not be where we are.There are tremendous benefits in e-dividend; it removes the problem of dividends becoming stale among others. Even f people change address; they will still get their dividends. We are determined to see the full implementation of this innovation. After today, the committee will also run a training programme for all the bank officers so that when an investor reaches a particular bank, that officer knows how to put the investor through. We are also going to do a massive public enlightenment. Already we are doing public enlightenment on other issues, but we are also going to run public enlightenment specifically on how investors will utilize the e-dividend portal.
What is the position of unclaimed dividends now?
On uncliemd dividedns with the position of CAMA and our engagements with the National Assembly we know some few years ago, SEC was of the opinion that making the unclaimed dividends status bar after 12 years is not good for the investors in the market, an unclaimed dividend should be such that even in the next 15 years somebody should be entitles to claim his dividends if he comes around with evidence that he owns the shares. But the provision of CAMA says we cannot do that. At that time SEC was leveraging on the provisions of our law ISA that says where there is a conflict between the two laws and as long as the subject is the capital market, the provision of ISA supersedes. And we leveraged on that and did another advocacy with the national assembly, but we did not get the support of major stakeholders in the market and long the line it did not go through. Our intention at the time was to have an unclaimed dividend trust fund. Some people that were against it said we do not want to have another NSITF and such that money will be kept there and people will not be able to access it. But we said there would be a very robust system where there will be authentications by the market. Such that anytime an investor comes with all the necessary evidence, we should be able to pay his or her dividends. But unfortunately we have not been able to do that. It is something that we need to look at as we move forward.What else did the CMC meeting deliberate on?We also discussed the issue of dematerialization, again this market has been yearning for that and it is part of the initiatives of the Capital Market Master plan. We need to have in this market a period where certificates are no longer being issued based on the consent of the investor. We have as SEC started that process, we have been interfacing with the registrars and the CSCS, we also had a presentation in respect to BVN system which is part of what we want to do.We have decided to close three of our zonal offices, Onitsha, Ibadan and Kaduna. Our idea is to fortify the remaining zonal offices, Lagos, Port Harcourt and Kano. Make them to be much stronger and more responsive in terms of interface with the market. We are also looking at some of the divisions within the Commission to merge them. We are doing a lot of reorganizations even within the SEC so that our regulation will be much stronger.You are already aware of our initiatives in terms of zero tolerance on infractions in the market. We are engaging the market closely and we have severally highlighted the role of the operator that we must operate within the rules of the game. Once you cross the green light and you are on the amber, we will tell you to go back. We are ready to tell you that two or three times, but once you decide to cross the red line, we will have no option that to pick that operator out of the market. We have done that before and we are ready to continue to do that. We also discussed the recapitalization, you are aware that we have given a deadline of 30th September for all capital market operators to meet the minimum requirement. This is the market that we say our word is our bond, the market that strives on integrity and we have informed the market that we are not going back on that deadline. We have engaged the market, we have provided all the assistance that they needed and so we are going to keep to that deadline. One of the commitments we made was to say we are not going to re-invent the wheel, our focus will be to faithfully implement the Capital Market Master Plan. We respect and recognize the tremendous efforts being put in place by all the capital market operators and participants in coming up with that report. And we say we are not going to prepare any report, our focus under the current leadership is to implement that report and one of the recommendations is to set up an advisory council, an advocacy group where if there is a need to change certain provisions of the law we will have a vanguard that will interface with the National Assembly. If we want government to change certain policies, we will have the team that will interface with government. We have been able to come up with a list of the advisory council, so because of the confidence the market has in us they have given us (SEC) the mandate to come up with the members between 10 and 12 people and in the next couple of weeks we will share with you who we think should be members of the council and their role will be purely advisory, interface with the judiciary, the parliament and the executive. We also came up with the technical team that will interface with the various groups or committees that are supposed to interface with the various groups. What we did in the Master Plan is that we look at what is the sort of things that we have to do? We came up with seven initiatives and we have a committee that is implementing that. But we now have a monitoring team within the SEC led by a Deputy Director; those people will be interfacing with those committees that are working with those initiatives to make sure that we achieve what we want to. Our commitment is to ensure that those seven initiatives are completed before the end of this year. By the time we conclude those initiatives and we enter next year, we will meet again at CMC to deliberate on the next initiatives that we think we should pursue for the first and second quarter of next year. Every CMC meeting we will meet and give a report of the progress we have made.The other thing which we are also doing is a very robust enlightenment programme on e-dividend, dematerialization, Direct Cash Settlement and Ponzi schemeThis in my opinion is the most robust public enlightenment programme that has ever been done in this market. We are reaching out to all the states of the federation through radio jingles in hausa, Yoruba, ibo and pidgin English. It will be run in all the stations for a period of three months. We are also suing the newspapers to place adverts and also flyers. We also have programmes in NTA, AIT and Channels and these programmes will continue for the next three months. If we feel that no much impact has been made, we are ready to spend more money to continue with that programme. We feel the market needs that enlightenment programme and we will do it.
On uncliemd dividedns with the position of CAMA and our engagements with the National Assembly we know some few years ago, SEC was of the opinion that making the unclaimed dividends status bar after 12 years is not good for the investors in the market, an unclaimed dividend should be such that even in the next 15 years somebody should be entitles to claim his dividends if he comes around with evidence that he owns the shares. But the provision of CAMA says we cannot do that. At that time SEC was leveraging on the provisions of our law ISA that says where there is a conflict between the two laws and as long as the subject is the capital market, the provision of ISA supersedes. And we leveraged on that and did another advocacy with the national assembly, but we did not get the support of major stakeholders in the market and long the line it did not go through. Our intention at the time was to have an unclaimed dividend trust fund. Some people that were against it said we do not want to have another NSITF and such that money will be kept there and people will not be able to access it. But we said there would be a very robust system where there will be authentications by the market. Such that anytime an investor comes with all the necessary evidence, we should be able to pay his or her dividends. But unfortunately we have not been able to do that. It is something that we need to look at as we move forward.What else did the CMC meeting deliberate on?We also discussed the issue of dematerialization, again this market has been yearning for that and it is part of the initiatives of the Capital Market Master plan. We need to have in this market a period where certificates are no longer being issued based on the consent of the investor. We have as SEC started that process, we have been interfacing with the registrars and the CSCS, we also had a presentation in respect to BVN system which is part of what we want to do.We have decided to close three of our zonal offices, Onitsha, Ibadan and Kaduna. Our idea is to fortify the remaining zonal offices, Lagos, Port Harcourt and Kano. Make them to be much stronger and more responsive in terms of interface with the market. We are also looking at some of the divisions within the Commission to merge them. We are doing a lot of reorganizations even within the SEC so that our regulation will be much stronger.You are already aware of our initiatives in terms of zero tolerance on infractions in the market. We are engaging the market closely and we have severally highlighted the role of the operator that we must operate within the rules of the game. Once you cross the green light and you are on the amber, we will tell you to go back. We are ready to tell you that two or three times, but once you decide to cross the red line, we will have no option that to pick that operator out of the market. We have done that before and we are ready to continue to do that. We also discussed the recapitalization, you are aware that we have given a deadline of 30th September for all capital market operators to meet the minimum requirement. This is the market that we say our word is our bond, the market that strives on integrity and we have informed the market that we are not going back on that deadline. We have engaged the market, we have provided all the assistance that they needed and so we are going to keep to that deadline. One of the commitments we made was to say we are not going to re-invent the wheel, our focus will be to faithfully implement the Capital Market Master Plan. We respect and recognize the tremendous efforts being put in place by all the capital market operators and participants in coming up with that report. And we say we are not going to prepare any report, our focus under the current leadership is to implement that report and one of the recommendations is to set up an advisory council, an advocacy group where if there is a need to change certain provisions of the law we will have a vanguard that will interface with the National Assembly. If we want government to change certain policies, we will have the team that will interface with government. We have been able to come up with a list of the advisory council, so because of the confidence the market has in us they have given us (SEC) the mandate to come up with the members between 10 and 12 people and in the next couple of weeks we will share with you who we think should be members of the council and their role will be purely advisory, interface with the judiciary, the parliament and the executive. We also came up with the technical team that will interface with the various groups or committees that are supposed to interface with the various groups. What we did in the Master Plan is that we look at what is the sort of things that we have to do? We came up with seven initiatives and we have a committee that is implementing that. But we now have a monitoring team within the SEC led by a Deputy Director; those people will be interfacing with those committees that are working with those initiatives to make sure that we achieve what we want to. Our commitment is to ensure that those seven initiatives are completed before the end of this year. By the time we conclude those initiatives and we enter next year, we will meet again at CMC to deliberate on the next initiatives that we think we should pursue for the first and second quarter of next year. Every CMC meeting we will meet and give a report of the progress we have made.The other thing which we are also doing is a very robust enlightenment programme on e-dividend, dematerialization, Direct Cash Settlement and Ponzi schemeThis in my opinion is the most robust public enlightenment programme that has ever been done in this market. We are reaching out to all the states of the federation through radio jingles in hausa, Yoruba, ibo and pidgin English. It will be run in all the stations for a period of three months. We are also suing the newspapers to place adverts and also flyers. We also have programmes in NTA, AIT and Channels and these programmes will continue for the next three months. If we feel that no much impact has been made, we are ready to spend more money to continue with that programme. We feel the market needs that enlightenment programme and we will do it.
What are the intents for the formation of WASRA?
In the past we had the WACMIC, which largely comprises the exchanges within the West African sub region. Within the Africa and Middle East, it is only West Africa that has not been able to integrate their markets and one of the requirements of IOSCO is that one of the ways that we can be able to reach out to all the nooks and crannies of our regions is through regional integration. In East Africa they have an excellent integration being led by Kenya, in the Middle East being led by Egypt and Dubai. Only in West Africa that we were lagging behind. WACMIC has been doing quite well, but in the past it never had the support of the regulators. So the three of us came together and formed WASRA, under the leadership of the French.We gave them the leadership because some of the issues we have been having is from the francophone countries, when you give the leadership to them, they will be able to now drive it. The whole idea is for us to be able to support WACMIC where it comes to issues to do with amendments of regulators; the regulators will now come in.How is the Nigerian market positioned for the integration of the West African market given the fact that we are a major player in the region?Like I said, WASRA is supposed to provide that support for the integration of the market. We think the West African market ought to be more than where it is now and with the work the WACMIC has done so far we have a committee within the SEC, NSE and other stakeholders and they are looking at the issue of rules, regulation and recapitalization. Am sure by the time they finish, we will be able to have a working document.WASRA has come to work and we are ready to support WACMIC to see that that integration within the West African Region is quite successful.
What will you say are some of your achievements so far of the Master Plan?
One of the achievements is what we are seeing here now with the launch of the e-dividend platform. It is part of the initiatives in the master plan. Another thing is that we are doing our best to reduce the transaction cost in the market. In the last four or five months, some of these initiatives have reached advanced levels. Our target is to conclude our initiatives for the year by the end of this year. We are engaging a consultant for transaction cost analysis and one of the things they will do is to interface with the various stakeholders and address any pending issue. By the end of this year, we should have concluded on that. We also spoke on the direct cash settlement, this is an issue that has been lingering in the market and all of us have agreed that we need to start implementing it whereby is a client buys shares and those shares are sold, rather than the proceeds being paid to the stockbrokers account, it will not be paid directly into the clients account. This we think is very good and will make people to come back to the market. With what we are doing with the BVN portal all the KYC we are doing, it will be very easy for those people to be known. These are some of the initiatives of the master plan and we expect the direct cash settlement to be concluded by the end of this year. So I believe we are on course and we have done more than what we expected. What happens to those who before now have been in the system and have issues with BVN?What is happening with collective investment scheme has it fully taken off or not? We still have it. Any application that is submitted to us and has met our minimum requirement, we approve. We have not put any ban on the approval of CIS. Anyone that has not been approved, maybe that application has not met our minimum requirement
Are you disturbed by the performance of the market or not?
Yes, we are not happy, but we have to bear in mind that that is how the stock market operates. In China few days ago, the market dropped by about 13 per cent so it is something that sometimes will go up and come down. But the beauty of it is that if you look at the fundamentals on some of these companies, they are good. It is a trend that the market is familiar with where sometimes it does well and at other times it does not do well. But our focus at SEC and the NSE and other stakeholders is to continually engage and bring the domestic investors back to the market as we think they are very critical in lifting the market and that is why we are going into this public enlightenment programme, the e-dividends and other initiatives. We think those initiatives will be able to bring back the domestic investors.The market is well regulated and operators are following a strong regulation regime and we are putting in strong processes to make sure the operators are fitting in strong and proper. Markets go up and down, what is more important is the fundamentals in the market.
What is SEC doing on the issue of unclaimed dividends?You know there is a provision of the law that SEC has been implementing where it says where dividend is stale for a period of 15 months, it should be reverted back to the companies. We have directed the registrars to comply with that and about 80 percent of them have complied. The people that have not complied have written to us with cogent reasons and sought for an extension and we have given them. At the end of that extension all of them must comply with the law. The law says after 15 months that dividend must be returned back to the company and it also says that after 12 years, it becomes status bar and as at today, that is the law and that is what we are operating wit.
What is the position of SEC on demutualization?
At SEC we have come up with very robust rules on demutualization and we had a lot of engagements with the market in coming up with those rules. It is now at the doorsteps of NSE, we have told them that any assistance they want in terms of advocacy we are ready to assist them. They have a council committee on demutualization and I am sure they are working on it.
What is the position of the capital market institute?
What NCMI is doing largely now is to run training programmes, we did not want to go into the bigger ticket because our intention is massively restructure the NCMI in terms of infrastructure and in terms of man power. We have engaged a consultant to look at the issues and by the time that work is completed, NCMI will certainly do more than what it is doing now.
What resulted in removing the zonal offices if the initial position for setting them up is to get closer to the people, have you achieved that aim now or what do you intend doing going forward?
There was a lot of work that was done that made us come to the conclusion to close those zonal offices. They have been in existence for like 10-20 years and we did a stock taking. Basically what they do is public enlightenment and secondly attends to complaints. Now with our lunching of the complaints management framework where issues at the primary level will go through the trade groups, then if they are not able to be sorted out they are escalated to u, we now realized that those zonal offices might not have enough work to do. We believe our public enlightenment will be focused mainly on radio, television and newspapers rather than on one on one in the zonal offices. For those two issues they were handling, we think our new focus for handling those issues will be better and therefore some of these zonal offices might not do those things maximally. Our intention is also to fortify the other zonal offices such that Port Harcourt should be fortified to be able to interface and go to Onitsha and other places around that zone, same with Kano to cover entire northwest.Rather than spending scarce resources on several offices, it is better we concentrate in one area in terms of the quality of man power and we think we will do better.
What is the state of the investor protection fund?
We have the Investor Protection fund funded solely by SEC. We have not paid anybody in the past couple of years because it is a very labourous process. First and foremost if you find an operator who is registered to perform the function of broker/dealer and he goes out and does fund management, as far as we are concerned, that fund management aspect has nothing to do with SEC. But if he is registered as a fund manager and goes out to do fund management and in the process he defrauds people, we believe SEC has right to come in to protect those investors. But if we register you for a particular role and you go and do something else, there is a limit to what SEC can do. If we say we are going to be tackling those issues, we will exhaust the entire funds in no time. If someone comes to you and says that he has lost money, we need to verify that he invested and there is a clear document that his money was collected before we approve that. The rules also mandate that the maximum anybody can collect is N200, 000 and there is also a provision that that sum collected is just a stop gap measure. If you invested N1, 000,000 and SEC gives N200, 000 we will go after that operator and if we are able to recover money, we will pay the balance and also collect the N200, 000 SEC has given.
Is anything stopping our target on dematerialization?
In dematerialization there are legacy issues, these issues will be addressed as we move forward, but what we want is to fully implement the dematerialization process. Other issues that will come out of it will now be addressed as we move forward
There was a lot of work that was done that made us come to the conclusion to close those zonal offices. They have been in existence for like 10-20 years and we did a stock taking. Basically what they do is public enlightenment and secondly attends to complaints. Now with our lunching of the complaints management framework where issues at the primary level will go through the trade groups, then if they are not able to be sorted out they are escalated to u, we now realized that those zonal offices might not have enough work to do. We believe our public enlightenment will be focused mainly on radio, television and newspapers rather than on one on one in the zonal offices. For those two issues they were handling, we think our new focus for handling those issues will be better and therefore some of these zonal offices might not do those things maximally. Our intention is also to fortify the other zonal offices such that Port Harcourt should be fortified to be able to interface and go to Onitsha and other places around that zone, same with Kano to cover entire northwest.Rather than spending scarce resources on several offices, it is better we concentrate in one area in terms of the quality of man power and we think we will do better.
What is the state of the investor protection fund?
We have the Investor Protection fund funded solely by SEC. We have not paid anybody in the past couple of years because it is a very labourous process. First and foremost if you find an operator who is registered to perform the function of broker/dealer and he goes out and does fund management, as far as we are concerned, that fund management aspect has nothing to do with SEC. But if he is registered as a fund manager and goes out to do fund management and in the process he defrauds people, we believe SEC has right to come in to protect those investors. But if we register you for a particular role and you go and do something else, there is a limit to what SEC can do. If we say we are going to be tackling those issues, we will exhaust the entire funds in no time. If someone comes to you and says that he has lost money, we need to verify that he invested and there is a clear document that his money was collected before we approve that. The rules also mandate that the maximum anybody can collect is N200, 000 and there is also a provision that that sum collected is just a stop gap measure. If you invested N1, 000,000 and SEC gives N200, 000 we will go after that operator and if we are able to recover money, we will pay the balance and also collect the N200, 000 SEC has given.
Is anything stopping our target on dematerialization?
In dematerialization there are legacy issues, these issues will be addressed as we move forward, but what we want is to fully implement the dematerialization process. Other issues that will come out of it will now be addressed as we move forward
On recapitalization what is the position of SEC and how prepared are we?
This market strives on integrity, our word is our bond. We have agreed that 30th of September is our deadline on recapitalization, SEC is not going to move the date, that date is sacrosanct and we have told the market that we will not change. We have told them all the options that we have, those that want to step down from their functions we have told them to do so in good time so that we can move on. There is a committee working towards that, there are teething issues that will come up but in about two or three weeks, they will likely have an idea of those that are likely going to meet it or not. By the time they are reaching the finishing line, they will have better idea of those that will make it and they will take precautionary measures so that there would be no crisis.
This market strives on integrity, our word is our bond. We have agreed that 30th of September is our deadline on recapitalization, SEC is not going to move the date, that date is sacrosanct and we have told the market that we will not change. We have told them all the options that we have, those that want to step down from their functions we have told them to do so in good time so that we can move on. There is a committee working towards that, there are teething issues that will come up but in about two or three weeks, they will likely have an idea of those that are likely going to meet it or not. By the time they are reaching the finishing line, they will have better idea of those that will make it and they will take precautionary measures so that there would be no crisis.
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