The Securities and Exchange Commission (SEC) on Friday said that the sum of N5 billion had been earmarked for its National Investor Protection Fund (NIPF) to compensate investors for pecuniary losses.

Mr Mounir Gwarzo, the SEC Director-General, disclosed this at a post media briefing at the end of the third quarter meeting of the Capital Market Committee (CMC).

Gwarzo said that the fund would be for losses arising from the insolvency, bankruptcy or negligence by non-broker/dealer capital market operators.

NIPF is a trust scheme established to compensate investors whose losses are not covered under the Investors Protection Funds being administered by Securities Exchanges and Capital Trade Points.

“This is a very excellent feat taken by the commission with its little resources as it has not been funded by the government.”

The DG said that the N5 billion NIPF was set-aside solely by SEC, but said that going forward the whole market would contribute to the fund.

He said that the country had joined an elite group of a handful of countries with this kind of investor compensation scheme.

“While dozens of jurisdictions have functional investor protection funds run mainly by exchanges and their dealing members, Nigeria is now among only a few countries to have a National Investor Protection Fund.”

He said that investor confidence suffered since the 2008 financial crisis from which the Nigerian stock market lost 70 per cent of its value.

Gwarzo said that investor confidence and the prevailing macroeconomic environment had been a major impediment to market recovery.

He said that the fund was established to strengthen investor confidence because investors were equally critical for financial system stability.

“This is why the protection of investors is a cardinal goal of securities regulators world-wide.”

He said that the former board of the commission approved the establishment of the Fund and earmarked resources to serve as its take-off grant in 2011.

According to him, the NIPF was incorporated on March 9, 2012 as a company limited by guarantee.

“To give effect to the establishment of the Fund, the commission, on April 15, 2015, promulgated and approved rules to guide the implementation of the fund.”

The DG said that the commission would continue to pursue initiatives that would strengthen investor confidence to boost market liquidity. (NAN)

•Photo shows SEC DG, Mr Mounir Gwarzo.