Introduce Regulatory Framework For Derivatives Trading, PENCOM Advises SEC

Mounir Gwarzo, DG SEC

By Ogbolu George with agency report

The National Pension Commission (PENCOM), has advised the Securities and Exchange Commission (SEC) to introduce regulatory frameworks to back the derivatives market before pension funds can be invested in it.

The advice was given on Wednesday, in Lagos, by the Head of Investment Supervision Department of PENCOM, Ehimeme Ohioma, at the ”Nigerian Structured Products Summit” organised by the Capital Market Solicitors Association (CMSA).

Ohioma said the commission had always been cautious with investing pension funds because workers’ involvement in contributory pension was mandatory and not voluntary

He also suggested that there should be a market infrastructure for price discovering and it might pose as a challenge if not available.

However, he said operators needed to be trained on the derivatives market while end users should be carried along.

Afolabi Olowookere of Economic Research and Policy Management in SEC said derivatives trading already existed, but because of the absence of formal rules, it has not been regulated.

He said the SEC had been looking at the kind of investors to be allowed to participate in the market, which could either be retail or portfolio investors.

Olowookere, who said that SEC has started training some operators so that they could understand the market, also said that there would be collaborations with some regulatory agencies to create awareness.

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