By Felix Onuah and Chijioke Ohuocha
ABUJA (Reuters) -Nigeria has introduced custody rules for its 4 trillion naira ($9.7 billion) fund management industry to protect investors and further develop its capital markets, the Securities and Exchange Commission (SEC) said on Sunday.
Before the rules, investment managers warehoused securities and cash, which meant that investors could lose in the event of a manager being declared bankrupt or insolvent.
“All client assets managed under discretionary and non-discretionary mandates are to be held under independent custodial agreements and custodial banks,” SEC director general Lamido Yuguda told Reuters
Yuguda said a significant amount of domestic investors exited the capital market after a 2008 crash wiped more than 60% off stock prices. He said the commission was trying to lure them back.
Nigeria has fewer than 500,000 individual accounts under different collective investment schemes, Yuguda said, adding that he was looking to widen the sector, split between public and private fund managers.
“With the introduction of total custody … we are likely to see a massive uptake of these kinds of products.”
Nigerian stocks are down 3.4% this year after rising 50% in 2020 as the world’s best performing market. But IPOs have yet to resume while a weak economic outlook and currency risk coupled with the COVID-19 pandemic have scared foreign investors.
(Writing by Chijioke Ohuocha; Editing by Alexander Smith and Nick Macfie)
