Nigeria has the largest economy in Africa. Moreover, it is the most populous country on the continent. Thus, it makes sense to learn more about the Securities and Exchange Commission of Nigeria.
Interestingly, the origin of the Securities and Exchange Commission dates back to 1962. The Capital Issues Committee formed under the aegis of the country’s central bank. It is worth mentioning that the Capital Issues Committee had the authority to examine applications from companies, which wanted to raise capital from the capital market. Moreover, another purpose of the committee was to help companies deal with various issues. Importantly, at that time, the Capital Issues Committee operated without a regulatory framework.
Over time, the level of economic activities started to increase and coupled with the promulgation of the Nigerian Enterprises Promotion Decree in the year 1972, it became clear that it was necessary to establish a special organization. As a result, the newly created Capital Issues Commission replaced the Capital Issues Committee.
Notably, the Capital Issues Commission came into existence in Mar, 1973. At that time, the new body had a board of nine members. A representative of the Central Bank of Nigeria served as chairman. Nevertheless, to deal with various issues, the country’s federal government decided to establish a Financial System Review Committee. The purpose of this committee was to review capital market activities and proffer ways when it comes to developing the market. In 1976, the Financial System Review Committee recommended the creation of the Securities and Exchange Commission. Consequently, in the year 1979 this commission replaced the Capital Issues Commission.
The Functions of the Securities and Exchange Commission
As mentioned earlier, the Securities and Exchange Commission formed in the year 1979. Importantly, the commission had more powers to regulate as well as to develop the Nigerian capital market.
Furthermore, it was up to the commission to determine the prices of issues and setting the basis for allotment of securities. Also, unlike its two predecessors stated above, the commission at this stage was independent of the country’s central bank. However, it continued to receive funding from the central bank.
Moreover, a representative from the bank was the chairman of the commission. The number of members increased from 9 to 12. Interestingly, other members of the commission came from the Ministries of Finance, Trade, and Industries as well as from the Nigerian Stock Exchange. Also, the Nigerian Enterprises Promotion Board. The rest of the members received nominations on the basis of individual merit.
Interestingly, in the year 1988 the enabling law Decree No. 7 of 1979 was re-enacted as SEC Decree of 1988. The new decree included additional provisions to address observed issues in the previous arrangement. Moreover, the new decree enabled the Commission to pursue its functions more effectively.
This is not the end of the story as authorities wanted to achieve better results when it came to investor protection. The result was a new Act known as “The Investment and Securities Act No. 45 of 1999”. Furthermore, lawmakers passed the Investment and Securities Act into law in 2007. At the moment, the Securities and Exchange Commission derived its powers from the Investment and Securities Act that dates back to 2007. The commission’s board consists of nine members.
Securities and Exchange Commission
Interestingly, the Securities and Exchange Commission (SEC) is a member of the International Organisation of Securities Commissions (IOSCO). The SEC joined this organization in 1985. Importantly, the goal of this organization is to develop, implement, and promote adherence to internationally recognized and consistent standards of securities market regulation.
People should take into account that Nigerian SEC qualified as an Appendix ‘A’ Signatory to the IOSCO MMOU in 2006. Also, the International Organisation of Securities Commissions is the global international standards setter.
How it Operates?
The Securities and Exchange Commission protects investors, market operators as well as ensures market integrity. Importantly, the commission ensures that only proper persons and institutions have the ability to operate in the market. Notably, instruments and persons registered in the market include securities/commodity exchanges as well as capital trade points.
Also, futures, options, and derivatives exchanges. Moreover, depository, clearing, and settlement agencies. Importantly, capital market operators, securities, and collective investment schemes also fall under the supervision of the commission.
Apart from registration, the commission calls for information from capital market operators. Moreover, it also undertakes and conducts inquiries as well as audits of any participant in the market.
Furthermore, registration and inspection represent only a part of their duties. Importantly, surveillance is another part of the duties. In fact, surveillance is carried out over exchanges as well as trading systems to prevent violations of market rules. Moreover, to deter and detect manipulations and trading practices that could undermine the market.
Interestingly, an investigation of alleged breaches of the laws and regulations is also the responsibility of the commission. Additionally, the SEC has the ability to take action against market operators that defy rulings. Another part of their duties is rule-making. This way commission is able to stay up to date with international best practices.
People in Nigeria should avoid organizations that are not regulated by the Securities and Exchange Commission.
Reprinted from financialbrokerage, the copyright all reserved by the original author.