SEC Emphasizes Investor Education as Key to a Stable Capital Market

Samuel Mobolaji

The Securities and Exchange Commission (SEC) has underscored the importance of investor education in fostering a healthy and stable capital market.

According to the SEC, a well-informed investor base is critical for building market confidence, ensuring growth, and protecting against fraud and misinformation.

Speaking at the 2024 International Organisation of Securities Commissions (IOSCO) World Investor Week (WIW), SEC Director General, Dr Emomotimi Agama, represented by Executive Commissioner Operations Mr Bola Ajomale, highlighted the increasing participation of retail investors in Nigeria’s capital market.

He explained that as the market grows, so does the need for enhanced educational efforts, especially given the complexities of digital finance.

“As financial products become more complex and technology-driven, from fintech innovations to cryptocurrency trading, it is crucial to equip investors with the knowledge to navigate these markets confidently and responsibly”, Agama stated.

World Investor Week serves as a platform to engage investors, improve transparency, and boost accountability in financial markets. This year’s focus on Technology and Digital Finance, Crypto Assets, and Sustainable Finance is seen as timely and critical, given the potential risks and rewards these areas present.

Agama noted that technological advancements are reshaping global capital markets, creating new opportunities for efficiency, transparency, and inclusiveness. In Nigeria, the rapid adoption of mobile technology and digital payments highlights the growth potential in digital finance.

However, he cautioned that technological advancements must be deployed responsibly to ensure investor protection, especially in light of cybersecurity threats and data privacy concerns.

The SEC is committed to working with other regulators to create frameworks that safeguard investors in the digital finance space. Nigeria has become a key player in the crypto market, particularly in peer-to-peer transactions, but the SEC has taken steps to regulate this volatile space. It has developed frameworks for Virtual Asset Service Providers (VASPs) and continues to address risks such as fraud, money laundering, and market manipulation.

“Our regulatory frameworks balance the need to encourage innovation while maintaining market integrity and investor protection. Crypto assets require clear oversight to ensure they are safe for public use,” Agama said.

He further added that the SEC has introduced a Regulatory Incubation Programme to allow new technologies and digital assets to be tested in a controlled environment.

Additionally, the SEC has launched an Accelerated Regulatory Incubation Programme to bring non-registered crypto operators under regulatory scrutiny.

The focus on sustainable finance is also critical, especially as environmental, social, and governance (ESG) factors become increasingly important in investment decisions. Agama emphasized that Nigeria must address sustainability challenges while fostering market growth.

He warned that while Nigeria’s capital market continues to grow, the evolving risks in global markets—such as economic volatility, cybersecurity threats, and financial crimes—demand that stakeholders remain vigilant.

“We must acknowledge the interconnected nature of global markets and the risks they present to our economy. Regulatory frameworks must evolve to keep pace with these challenges,” Agama said.

The SEC’s commitment to investor education and market integrity was echoed by Lagos State Governor Babajide Sanwo-Olu. Represented by Mr. Sam Egube, Deputy Chief of Staff, Governor’s Office, Sanwo-Olu highlighted Lagos’ position at the intersection of innovation, technology, and finance. He emphasized the need to embrace the opportunities presented by digital assets while ensuring investor protection.

“Cryptocurrencies, blockchain, and digital assets are transforming how we understand value and investments. While they offer great potential, they also bring new risks, particularly in regulation and security. It is crucial that we engage thoughtfully with these developments,” Sanwo-Olu said.

He further noted that sustainable finance is not only a global priority but also a pressing issue for Lagos and Nigeria. Investments in green technologies and socially responsible businesses are not only ethical but also sound strategies for long-term value creation.

As World Investor Week 2024 unfolds, both the SEC and the Lagos State government called for collective action to foster a resilient, inclusive, and sustainable financial system that benefits all market participants.