CSCS Chief Tells Investors to Use Credible Portfolio Managers

Investors have been advised to be savvy in choosing their portfolio managers to ensure their resources are not entrusted with credible, efficient and well capitalized operators.
Chief Executive Officer, Central Securities Clearing System (CSCS) Kyari Bukar gave this advice at the weekend during the Finance Correspondents Association of Nigeria (FICAN) Bi-Monthly Forum hosted by CSCS in Lagos.
Bukar, who spoke on the theme: ‘Role of Central Securities Clearing System in The Nation’s Financial Sector’ said investors needed to be fully informed about the market and companies where they are putting their capital.
He said: “The most important thing for a market like this is to have an informed investor. The investors needed to be informed for them to exercise their choices. There is need to enlighten investors to enable them make the right choices for the future,” he said.
According to him, there is also need for investors to regularly check their accounts with the CSCS, as such would update them on the performance and position of their investments with brokers.
He said the automation of brokerage business has reduced the cost of operation for most operators. Automation, he said reduces cost of operation for companies. “The most important thing is that investors should be in control of their money or go for collective investment scheme. Still, investors need to beware and invest in portfolio managers that are credible, efficient and have all the necessary capital to be in the position to sale their assets,” he said.
He said both the big and small operators have gone retail, meaning that they can accommodate both big and small investors after getting their processes fully automated.
 “Previously, if it is not large volume, brokers may not efficiently service the system. But with automation of operations, some of the big stockbrokers have through automated system, have realized that servicing the customer, whether they have N1, 000 or N10 billion, is usually the same. Stock brokers now require very little efforts in servicing the investors. There must be a code that the industry must develop to serve all investors,” he said.
Kyari explained that the CSCS is implementing the transaction cost analysis because it wants to understand the total cost of each transaction to an investor.
He said that investors buy shares to make money and are always concerned about fees and other cost of transaction that follow each deal. “Investors pay fees when they are buying shares and when exiting. We need to benchmark ourselves, against other markets. Since foreign investors look at the various markets, and apportion their resources to them accordingly, depending on many criteria, there is need to be competitive with cost,” he said.
According to him, investors may also be looking at  how free or open the market is, how easy it is to go in and out, and the riskiness of the country, especially whether it is democratic or not among other factors. He said there are other investors that consider other elements like the transaction costs before they go in. 
 “It may result in reduction of charges and that might increate market participation. Understanding the cost and dynamics of both the intrinsic and explicit costs means that you are taking an informed action rather than just reacting and that is the reason we are applying the transaction cost analysts,” he said.
Bukar said operators should be efficient in carrying out their work and also consider critical issues like time spent in buying or selling portfolios and timeline for share certificate dematerialization are things investors look out for in different markets.

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