SEC plans to monitor foreign securities brokers in Nigeria
In an effort to reduce the demand for foreign stocks in Nigeria, the Securities and Exchange Commission (SEC) is proposing stricter and stricter regulatory oversight and requirements for foreign brokers in the country.
In an interview monitored by Nairametrics, SEC Executive Commissioner for Operations Dayo Obisan revealed that the commission plans to actively monitor local facilitators of foreign stocks.
“At least 400,000 Nigerians have invested in foreign stocks through brokers in the past 18 months,” Obisan notedNigerians actively trading or holding foreign stocks now outnumber those investing in the local market and about 70% of those participants are under 40 years old.
This is despite the fact that the Nigerian Stock Exchange was dubbed the best performer last year after gaining 50% since the start of the year. The shares are however down 5% since the start of the year.
In contrast, the S&P 500 index is currently trading at 14.50% year-to-date, setting a new all-time high.
Furthermore, the value of transactions has been declining since the start of the year as demand shifts from the Nigerian stock market to cryptocurrency and the foreign stock market.
“There is a growing interest among the younger population and this concerns the commission mainly because it creates an avenue of exploitation,” said Obisan.
The SEC intends to license companies offering foreign stocks under “digital sub-broker” regulations, which Obisan says should provide some form of clarity to their operations.
He also said the requirement will ensure “regulatory responsibilities for onboarding customers, safekeeping of assets and compliance with reporting requirements are met”.