Agency tasks SEC on regulatory framework for derivatives trading
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Mr Ehimeme Ohioma, the Head of Investment Supervision Department of PENCOM, gave the advice at the “Nigerian Structured Products Summit organised by the in Lagos."
Ohioma said that the commission had always been cautious with investing the pension funds because workers’ involvement in contributory pension was not voluntary, but mandatory.
He said that investing in derivatives could be seen as hedge against market risks and that there were concerns in terms of regulatory oversight and framework.
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Ohioma also suggested that there must be market infrastructure for price discovering and “if not available might pose a challenge’’.
He said that operators needed to be trained on the derivatives market while end users should be carried along.
Mr Afolabi Olowookere of Economic Research and Policy Management in SEC said that the derivatives market already existed, but admitted that it had not been regulated because of the absence of formal rules.
Olowookere said the SEC had been looking at the kind of investors to be allowed to participate in the market and which could either be retail or portfolio investors.
He said that the market had the potential to grow with good products and complete understanding of its operations by stakeholders.
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Olowookere said that SEC had started training some operators so that they could understand the market.
He said that there were also collaborations with some regulatory agencies to create awareness.
The researcher said that SEC was already thinking of using applications used in other climes to boost the market.
Mr Dapo Oladunjoye, Group Treasurer in Access Bank, said that the volume of derivatives traded on the Nigerian Stock Exchange was insignificant.
Olagunju said there was the need to understand the underlying factors for the trading of derivatives at the market.
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He said that the regulatory agencies – the CBN, SEC and PENCOM, among others – were effectively playing their roles in the market.
The treasurer said that the issues surrounding the derivatives market should be demystified.
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