It is refreshing to know that the Securities and Exchange Commission (SEC) has identified the major challenges that have plagued the country’s capital market and has resolved to tackle the problem.
Though it is certain that customers and shareholders of Asset Management Companies and Fund Management firms have been on tenterhooks since the beginning of financial reforms in the country, SEC has a lot to do to rebuild confidence in the capital market space by ensuring that customers’ investments are safe.
It is for this reason that the Goldstreet Busisness commends the Commission and its leadership for regularly providing updates on happenings in the sector and how AMCs and FMs must ensure that they keep their utmost obligations to their clients.
Already, SEC has put 21 FMs on forensic audit and has stated categorically that those companies are also part of about 46 fund management firms having major regulatory issues out of a total of 128 FMs.
We know the challenges may not be wiped out totally but at least an intervention from the regulator has been proposed which must be embraced by all in the financial sector space.
Thus, an indication to introduce stringent licensing requirements for Asset Management Companies (AMCs) and Fund Managers (FMs) as part of ongoing measures to deliver a more robust capital market is the way forward.
The commission is also committed to holding AMCs/FMs accountable for honoring their obligations to their clients; introduction and enforcement of corporate governance guidelines for operators in the industry including AMCs/FMs; higher minimum capital/liquidity requirements for AMCs/FMs and other operators; introducing investment guidelines including restrictions on related party investments/guaranteed investments; streamlining the Commission’s internal processes including automation of processes to promote efficiency; and stringent licensing requirements will produce sound market operators, stronger financial intermediation and financial inclusion.
With all these impending measures, we can only wish the SEC well and ask all stakeholders in the financial sector to collaborate in executing these measures.
These measures when devised and implemented are sure to curb and significantly reduce anxiety among sections of investors in the sector, which the SEC itself has noticed.
The fact that the SEC has also noted that some investors are facing difficulties accessing matured investments from some licensed AMCs and FMs due to liquidity issues should convince the public that the SEC is likely to devise and implement the proposed strategies to make a good name for itself as a regulator.
We encourage the SEC to create more awareness to educate players in the sector in order to deepen the country’s financial inclusion agenda.
