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The Role O f CDS’s In E ducating C apital M arkets I nvestors

The Role O f CDS’s In E ducating C apital M arkets I nvestors. Dr. Ahmed Saad Chairman of Middle East North Africa (MENA) IFIE Regional Subcommittee, and Chief Advisor of the Egyptian Financial Supervisory Authority ( EFSA). Regulator. Investor. Capital Market. Issuers.

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The Role O f CDS’s In E ducating C apital M arkets I nvestors

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  1. The Role Of CDS’s In Educating Capital Markets Investors Dr. Ahmed Saad Chairman of Middle East North Africa (MENA) IFIE Regional Subcommittee, and Chief Advisor of the Egyptian Financial Supervisory Authority (EFSA)

  2. Regulator Investor Capital Market Issuers Clearing House Custodian Exchange Brokers Main source of Income : Transaction Cost

  3. Investors Individuals Institutions These are our target segment in the investors educational programs Why Should We Educate them?

  4. Informed and educated investors are one of the key drivers to the growth of securities markets

  5. Principles for investors education • Investor education programs should be efficient, effective and appropriate for their intended audience • Investor education should be delivered to as broad an audience as possible • A comprehensive investor education program should include investor protection services • A comprehensive investor education program should include measures to foster dialogue and cooperation among providers of investor education

  6. Best practices - Investor education programs should be efficient, effective and appropriate for their intended audience • The content of investor education programs should be appropriate for investor’s need • Investor education programs should not be promotional and impart specific skills • Longer-term investor education programs imparting more sophisticated understanding of financial products and markets are encouraged • Periodic assessments of investor education programs should be carried out

  7. Best practices-Investor education should be delivered to as broad an audience as possible • Distributing investor education programs through various channels • Employing different learning strategies to enhance the learning process • Targeting specific audience • Promoting diversity and innovation among investor education providers

  8. Best practices-A comprehensive investor education program should include investor protection services • Provisions of investor alerts • Provisions of information on intermediaries

  9. Best practice-A comprehensive investor education program should include measures to foster dialogue and cooperation among providers of investor education • Informal • Universities Circuits • Press Conferences • Formal • EFSA • Exchanges

  10. Potential Partners • Governmental agencies • National and local exchanges • Custodians • Investors groups (NGO’s) • Media outlets

  11. Investor education Challenges • Encouraging market participants to support educational programs • Lack of training courses that are tailored for individual investors • Variation of financial literacy among targeted audiences (Market fragmentation) • Channel of communication which will be most effective in reaching targeted audiences • Ensuring investor education is not confused with professional advise

  12. Developing a program • Who are the targeted investors ? • What are their levels of financial literacy? • What should investors know? • How do investors learn? • What are the tools of communication? • Investor education budget.

  13. How to create a program? • Trained and competent staff • Tools and technology to assist staff • Various contact methods between investor and provider • Database for recording and retrieving contacts

  14. Role of regulator • Assure that the securities markets are open, fair, and honest. • Require companies to disclose information • Catch wrongdoers and impose punishment ranging from fines to kicking them out of the industry

  15. Role of regulator in investor education process • Show investors how to research investments and the people who sell them • Make information about publicly traded companies available to the public • Answer questions and handle complaints • Provide free educational materials

  16. What tools do regulators use to meet their investor audience? Most rely heavily on the following: • Brochures, leaflets • The regulators own website • On-line newsletters • A presence at investor trade fairs • Conferences • Active use of the media (TV , radio, newspaper articles)

  17. Conclusion Successful Investor Education Programs lead to: • Maximizing market active user’s base, broader investor pool. • Markets gain depth and liquidity. • Growth in businesses and jobs within market participants. • Increase investors protection through knowledge. • Regulators get tips on fraud. • Guarantee more efficient capital allocation. • Building more confidence in capital markets. • Ease of new financial instruments and tools introduction to the markets.

  18. As a major player in the market, CDS should cooperate with other participants to assure market growth by devoting time, efforts, and financial support for investors education programs

  19. Thank You

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