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SEC Moves to Open up Stock Market to Small-Scale Investors

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  • SEC Moves to Open up Stock Market to Small-Scale Investors

The Securities and Exchange Commission (SEC) has launched a bid to simplify stock market’s account opening process and requirements for low-income and financially- excluded segment of the population.

This is part of efforts to widen the domestic investors’base.

Less than three per cent of the population invests in the stock market, a situation that narrows the national capital formation process and subjects the market to extreme fluctuations of foreign portfolio investors.

In a circular at the weekend, SEC plans to introduce a new three-tiered account opening and requirements that allow financially excluded and low-income persons to start investing in the stock market. This will be done with simple identifications and with no specified minimum investment deposit.

With these, any Nigerian that can provide basic information such as name, passport-sized photograph, place of birth, nationality, gender, home location and address and telephone number; directly or through an agent, will be able to open a stock market investment account with as little as the person can afford. There is no further provision of documentary evidence for verification.

The proposed framework is, however, still subject to further scrutiny of stakeholders and approval by the board of SEC.

Under the three tiered know-your-customer (KYC) requirements being introduced under the new framework, potential investors are categorised under the three headings of low-risk account, medium-risk account and high-risk account. Capital market operators are required to move accounts to the next level once they exceed the stated maximum cumulative balance for each level.

For the low-risk account, no minimum investment amount is required for opening the account, which may be opened through an agent, at the stockbroker’s office or linked to a mobile phone. Under this category, investments can be made by account holder and third parties while redemption payments are restricted to account holder.

This account applies only to Nigerian citizens or residents and there shall be no transfer of funds to other accounts and no foreign remittance can be credited to the account. A low-risk account is limited to only one account per person for each capital market operator and it shall be limited to a maximum single deposit amount of N20,000 and maximum cumulative balance of N200,000 at any point in time. It shall also be limited to a maximum daily redemption limit of N30, 000.

To open a low-risk account, a prospective investor only need to provide basic customer information such as name, passport-sized photograph, place of birth, nationality, gender, home location and address and telephone number and all these may be sent electronically or submitted onsite to the capital market operator, its branches or agent’s office. There shall be no further request for documentary evidence of identity.

The medium-risk account builds on the requirements for low-risk account by requesting for verification of the basic customer identification information. The medium-risk account may be operated by phone or through the capital market operator’s customer web site and portal.

The medium-risk account is limited to a maximum single deposit of N40, 000, a maximum cumulative balance of N400, 000 at any point in time and a maximum daily redemption limit of N50, 000.

In addition to these, a medium-risk account holder will be required to provide suitable referees, which may include village heads, trade groups, supervisors and employers among others.

“Where verification of client’s identification documents is not complete the client shall not be allowed to operate the account,” according to the proposed framework.

Under the high-risk account classification, capital market operators are required to obtain, verify and maintain copies of all the required documents for opening of accounts. Such accounts can only be opened at the capital market operator’s office or branch of its agent’s office face to face by the prospective customer and a minimum investment amount may be required for the opening of high-risk accounts. There shall be no maximum limit on single deposits and cumulative balance.

The high-risk customers are required to comply with the KYC requirements contained in SEC’s Anti-Money Laundering and Combating the Financing of Terrorism Regulations, 2013. Besides, high-risk customer identification information and documents are to be verified against similar information contained in relevant data bases.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

A Threat to Revenue As Nigeria’s Largest Importer of Crude, India slash Imports By $39.5B

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Crude oil

Nigeria’s revenue earning capacity has come under threat following the reduction of importation of crude oil by India.

India, Nigeria’s largest crude oil importer, reduced crude oil imports by $39.5bn in April, compared to the same time the previous year, data from India’s Petroleum Planning & Analysis Cell showed.

According to the Indian High Commission in Nigeria, India’s crude oil imports from Nigeria in 2020 amounted to $10.03bn.

This represented 17 percent of Nigeria’s total crude exports for the year according to the Nigerian National Petroleum Corporation, as quoted by OilPrice.com.

As Nigeria’s largest importer of crude oil, lockdowns in India’s major cities from the COVID-19 surge in April had ripple effects on Nigeria’s oil sales.

The NNPC was prompted to drop the official standard price of its main export streams, Bonny Light, Brass River, Erha, and Qua Iboe, by 61-62 cents per barrel below its April 2021 prices. They traded at $0.9, $0.8, $0.65, $0.97 per barrel respectively, below dated Brent, the international benchmark, as Oilprice.com showed.

India had been buying the not-too-light and not-too-heavy Nigerian crudes that suited its refiners.

Reuters reported that the Indian Oil Corporation’s owned refineries were operating at 95 percent capacity in April, down from 100 percent at the same time the previous month.

An official at the IOC was quoted as saying, “If cases continue to rise and curbs are intensified, we may see cuts in refinery runs and lower demand after a month.” Hundreds of seafarers risked being stuck at sea beyond the expiry of their contracts, a large independent crude ship owner reportedly told Bloomberg.

India reportedly bought more American and Canadian oil at the expense of Africa and the Middle East, reducing purchases from members of the Organisation of the Petroleum Exporting Countries to around 2.86 million barrels per day.

This squeezed the group’s share of imports to 72 percent from around 80 percent previously, as India’s refiners were diversifying purchases to boost margins, according to Reuters.

India also plans to increase local crude oil production and reduce import expenses as its population swells, according to Bloomberg.

A deregulation plan by the Narendra Modi-led government to boost national production to 40 million tonnes of crude oil by 2023/2024, an increase of almost eight million tonnes, had already been initiated.

According to Business Today, an Indian paper, the country currently imports 82 percent of its oil needs, which amounted to $87bn in 2019.

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Energy

Invest Africa and DLA Piper Partner to Support ESG Best Practice in African Renewable Energy Projects

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Invest Africa - Investors King

The global law firm, DLA Piper, has partnered with Invest Africa, the leading trade and investment platform for African markets, to support the development of ESG best practice in African renewable energy projects.

Clear Environmental, Social and Governance (ESG) targets and measurements have become an increasingly important part of fundraising as investors seek to align their portfolios with sustainable growth. For a continent boasting ample natural resources, this presents a significant opportunity for Africa’s green energy sector. However, renewable does not always equal sustainable and developing and articulating ESG metrics can pose a significant challenge to projects as they prepare investment rounds.

The project will assemble experts from the worlds of impact investment, development finance and law. Across a series of online meetings, participants will discuss strategies to improve ESG practices in African renewable projects from both a fundraising and operational perspective.

Amongst those speaking in the inaugural session on Thursday 13th May are Cathy Oxby, Chief Commercial Officer, Africa GreencoDr. Valeria Biurrun-Zaumm, Senior Investment Manager, DEGOrli Arav, Managing Director – Facility For Energy Inclusion (FEI) – Lion’s Head Global PartnersBeatrice Nyabira, Partner, DLA Piper Africa, Kenya (IKM Advocates) and Natasha Luther-Jones, Partner, Global Co-Chair of Energy and Natural Resources, International Co-Head, Sustainability and ESG, DLA Piper.

Veronica Bolton-Smith, COO of Invest Africa said, “Africa is particularly vulnerable to the impact of climate change despite contributing very little to global emissions. As the price of renewables fall, they will form an ever more important part of Africa’s electrification. In this context, it is essential that projects be given the tools to apply best practice in ESG not only from an environmental perspective but also in terms of good governance, fair working conditions and contribution to social inclusion. I look forward to working closely with DLA Piper on this important topic.”

Natasha Luther-Jones, Global Co-Chair Energy and Natural Resources and International Co-Head Sustainability and ESG at DLA Piper also commented, “Climate change is one of the biggest challenges companies, and people, face today and when we look at its reduction – whether that be in how we power our devices, what we eat or how we dress, where we live or how we work – all roads come back to the need to increase the amount of accessible, and affordable, clean energy. However, renewable energy companies are not automatically sustainable as sustainability is a focus on all ESG factors, not just environmental. We know the need for renewable energy is only going to continue to rise, and therefore so will the number and size of renewable energy companies. The additional challenge is to make sure they are truly sustainable organisations and that’s what we’re excited about discussing during the webinar.”

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Crude Oil

Oil Posts 2% Gain for the Week Despite India Virus Surge

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Crude Oil - Investors King

Oil prices steadied on Friday and were set for a weekly gain against the backdrop of optimism over a global economic recovery, though the COVID-19 crisis in India capped prices.

Brent crude futures settled 0.28% higher at $68.28 per barrel and U.S. West Texas Intermediate (WTI) crude advanced 0.29% to $64.90 per barrel.

Both Brent and WTI are on track for second consecutive weekly gains as easing restrictions on movement in the United States and Europe, recovering factory operations and coronavirus vaccinations pave the way for a revival in fuel demand.

In China, data showed export growth accelerated unexpectedly in April while a private survey pointed to strong expansion in service sector activity.

However, crude imports by the world’s biggest buyer fell 0.2% in April from a year earlier to 40.36 million tonnes, or 9.82 million barrels per day (bpd), the lowest since December.

In the United States, the world’s largest oil consumer, jobless claims have dropped, signalling the labour market recovery has entered a new phase as the economy recovers.

The recovery in oil demand, however, has been uneven as surging COVID-19 cases in India reduce fuel consumption in the world’s third-largest oil importer and consumer.

“Brent came within a whisker of breaking past $70 a barrel this week but failed at the final hurdle as demand uncertainty dragged on prices,” said Stephen Brennock at oil brokerage PVM.

The resurgence of COVID-19 in countries such as India, Japan and Thailand is hindering gasoline demand recovery, energy consultancy FGE said in a client note, though some of the lost demand has been offset by countries such as China, where recent Labour Day holiday travel surpassed 2019 levels.

“Gasoline demand in the U.S. and parts of Europe is faring relatively well,” FGE said.

“Further out, we could see demand pick up as lockdowns are eased and pent-up demand is released during the summer driving season.”

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