The Director-General of Securities and Exchange Commission, Lamido Yuguda has announced the commencement of the implementation of a 100 per cent custody requirement in the collective investment schemes sector.
All clients’ assets managed under discretionary and non-discretionary mandates were to be held under an independent custodial agreement and custodial banks. Collective investment schemes, also known as mutual funds, were previously authorised for public offering by the SEC.
The SEC boss noted that the commission was having some new enforcement and insistence on the compliance of Collective Investment Schemes but with weak implementation.
Explaining reasons for the new move, Mr Lamido Yuguda stated thus:
“The investment manager before now did not only have the investment management responsibility for the fund but also kept the securities and cash as whole shares in this investment. The risk is that if the investment manager should go, then the investor loses and that is not acceptable in financial markets around the world.
“A lot of these funds in the privately-held fund management mandates are in our custody.
“With the introduction of total custody in that sector, we are likely to see a massive uptake of these kinds of products”.