The Role Of CDS’s In Educating Capital Markets Investors

Dr. Ahmed SaadChairman of Middle East North Africa (MENA)

IFIE Regional Subcommittee, and Chief Advisor of the Egyptian Financial Supervisory

Authority (EFSA)

Investor IssuersCapital Market

Regulator

CustodianExchange

Clearing House

Brokers

Main source of Income : Transaction Cost

Investors

InstitutionsIndividuals

These are our target segment in the investors educational programs

Why Should We Educate them?

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

Principles for investors education1. Investor education programs should be efficient,

effective and appropriate for their intended audience

2. Investor education should be delivered to as broad an audience as possible

3. A comprehensive investor education program should include investor protection services

4. A comprehensive investor education program should include measures to foster dialogue and cooperation among providers of investor education

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

Best practices-Investor education should be delivered to as broad an audience as possibleDistributing 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

Best practices-A comprehensive investor education program should include investor protection services

Provisions of investor alerts

Provisions of information on intermediaries

Best practice-A comprehensive investor education program should include measures to foster dialogue and cooperation among providers of investor educationInformal - Universities Circuits- Press Conferences

Formal- EFSA - Exchanges

Potential PartnersGovernmental agencies

National and local exchanges

Custodians

Investors groups (NGO’s)

Media outlets

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

Developing a programWho 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.

How to create a program?

A. Trained and competent staff

B. Tools and technology to assist staff

C. Various contact methods between investor and provider

D. Database for recording and retrieving contacts

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

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

What tools do regulators use to meet their investor

audience?Most rely heavily on the following:

Brochures, leafletsThe regulators own websiteOn-line newslettersA presence at investor trade fairsConferencesActive use of the media (TV , radio, newspaper

articles)

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.

ConclusionSuccessful Investor Education Programs lead to:

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

Thank You