SEC Nigeria, Ghana to promote market regulations in West Africa sub-region

• Nigerians’ participation in CFD rises despite lull in crypto market
• Monthly trading volume averages N15b, says report

The Securities and Exchange Commission (SEC) Nigeria has restated commitment to working with its Ghanaian counterpart to promote innovation, fair competition and efficient market regulations within the West Africa sub-region.

Director General of SEC Nigeria, Lamido Yuguda, stated this during a meeting with a delegation from SEC Ghana in Abuja, yesterday.

Yuguda, who was represented by the Executive Commissioner, Corporate Services, Ibrahim Boyo, recalled that SEC Nigeria signed a Securities-Regulation-MOU with SEC Ghana in Accra, on August 27, 2003, to foster co-operation and ensure orderly, fair and transparent financial markets across its jurisdictions.

He said it was appropriate that SEC Ghana launched its maiden Capital Market Master Plan (CMMP) in May 2021, to serve as blueprint for developing the Ghanaian capital market over the next ten years.

In his response, Director General of SEC Ghana, Rev. Daniel Ogbarmey Tetteh, said his organisation has been leveraging on the MoU signed with Nigeria few years ago to develop the capital market in Ghana.

“We remain committed as we work together to boost our capital markets and push for the integration of the capital market in the sub-region. Nigeria and Ghana have what it takes to ensure that the sub-region has a well integrated and functional capital market,” he said.

MEANWHILE, the number of Nigerian youths embracing contract for difference (CFD) investment platforms may have spiked last quarter, even as the cryptocurrency market continues to dip.

A report by Infinox Capital estimates monthly trading volume by Nigerians at between N10 and N20 billion. The number of traders is pegged at between 800,000 and one million.

Globally, the market is 55 per cent controlled by those within 18 to 44 years.

A whopping $1.2 trillion was wiped off the entire cryptocurrency market in the second quarter with bitcoin, the flagship coin, seeing its worst performance in a decade with about 58 per cent of its value lost.

But the massive sell-off extended to other asset classes with technology stocks being among the worst hit. The technology-heavy Nasdaq Composite index, for instance, sank by 22 per cent.

Generally, it was a horrific period for investors with the S&P 500′seeing its poorest first half of the year since 1970.

The period may have marked a significant shift of preference among Nigerian youths who are fast embracing the global financial market.

There might be a significant shift from cryptocurrency (where Nigeria is rated the third country with the fastest adoption rate) to CFD trading, including FX.

For instance, Infinox Capital, a global brokerage firm that has operated in Nigeria since 2019, witnessed a dramatic surge in subscription in May and June, when it registered 4,657 clients.

The figure is about 40 per cent of its total subscriber base of close to 11,484, which it pulled since September 2019 when it took off. Country Director of Infinox, says Nigeria controls a very small fraction of the global FX market but is growing very fast.

Growth of Nigeria’s CFD might have peaked in the past few months but it has witnessed tremendous growth in recent years with the report saying the country has seen triple-digit growth in the last five years, making it the fastest-growing in Africa.

“The number of Nigerian forex traders is estimated at 800,000 to 1,000,000 with approximately 25 per cent of these active traders,’’ says the report.

Country Director of the brokerage firm, Oluwaseun Oyeleke, said Nigeria lags in terms of regulation. Proposals to get SEC to firm up a regulatory framework for online FX trading moves at a snail’s speed, it was learnt.

He said: “Several laws back the activities of foreign exchange transactions in this offline FX market. However, while South Africa’s Financial Sector Conduct Authority (FSCA) and Kenya’s Capital Markets Authority (CMA) regulate online forex brokers in their countries, Nigeria has no specific regulation to check online forex brokers.”

A few of the operators, thus, rely on foreign regulations. Infinox is regulated by three liquidity-providing (LP) overseas institutions. According to the firm’s Country Director, local regulation is key to making the most of the huge opportunity the global ecosystem provides.

Head of Marketing, Petrus Okegbu, believes the firm would play a key role in the economy as it continues to grow its business and educate Nigerians on legitimate online CFD trading.

He said the company complies with global best practices, adding that the firm would leverage social investments in the coming years to reach out to more Nigerians.