The Securities and Exchange Commission (SEC) has suspended Ecobank from all capital market activities and from being a receiving bank because of irregularities surrounding a margin loan, a notice on its website said on Thursday.
SEC, according to Reuters, said an Ecobank client Arian Capital Management had used capital from another company as collateral for a margin loan from the lender.
After suspending Arian, the SEC said it had asked Ecobank for an explanation but the bank did not.
The Securities and Exchange Commission (SEC) the Central Bank of Nigeria (CBN) are considering a tied-up cross-selling arrangement that would enable fund managers use banks and other financial services outlets as retail outlets for mutual funds.
The Nation gathered that the mutual funds retail network muted by the SEC, would involve collaboration between the Commission, which is primarily saddled with regulation of mutual funds; the CBN, which oversees banks; the Bankers’ Committee, the a body of all banks and the CBN and the Fund Managers Association of Nigeria (FMAN), the umbrella body of all fund managers.
Besides banks, the new retail network would also include the Nigerian Postal Services (NIPOST), which owns and manages all the post offices nationwide, and also inputs from the Nigerian Stock Exchange (NSE), which lists mutual funds on its official list.
Under the arrangement, such as bankassurance where insurance products and services are offered within banking hall or platform, investors and bank customers can buy mutual funds from their bankers, creating a seamless arrangement that combines savings with investment management.
Existing and potential investors would also be able to buy mutual funds and access mutual funds information through post offices nationwide.
The source said the new retail network was part of efforts to promote the development of collective investment schemes (CISs) as veritable means of pooling huge national savings into the capital market and ultimately, for long-term funding of the economy.
The retail network is part of an all encompassing strategic plan with the objective of expanding the reach of collective investment schemes to greater percentage of the investing public.
The strategic plan incorporates innovations into the market such as introduction of incentives to encourage retail investors back into the market through collective investment schemes, introduction of distribution and sales points, classification of schemes to cater for the investment appetite of the various classes of investors, review of minimum subscription levels for retail investors, review of the offering process for Schemes, among other strategic initiatives.
Besides, there would be improvement of knowledge level of operators to foster professionalism. This would be done through continuous education, training and certification of fund managers and sales marketing staff.
Net assets value of CISs or mutual funds stood at N111.21 billion as at March 8, 2013. There are 49 registered mutual funds with about 170,000 investors participating in the funds. Analysis of the components showed equity-based funds with largest base of N51.68 billion. This was followed by money market funds at N16.15 billion while real estate funds trailed with N16.04 billion. Other components included bond funds, N10.30 billion; balanced funds, N9.82 billion; ethical funds, N6.87 billion while other funds totaled N2.7 billion.
Director General, Securities and Exchange Commission (SEC), Ms Arunma Oteh, recently identified collective investment schemes as part of the priorities of the Commission for this year.
According to her, SEC would build on the momentum of the past year, which saw the return of retail investor interest in the stock market by continuing to advocate and encourage the adoption of collective investment schemes for retail investors.
The Securities and Exchange Commission has approved new rules allowing companies to issue Islamic bonds, a move aimed at attracting Middle Eastern investors.
Reuters reports that Nigeria, home to the largest Muslim population in sub-Saharan Africa, is trying to establish itself as the African hub for Islamic finance, emulating the success of Malaysia.
“We have opened up the market to attract investments into Nigeria, particularly from Middle East investors,” the Director-General of SEC, Arumna Oteh, told Reuters in her office in Lagos.
Islamic banking assets globally exceed $1 trillion and could reach $4 trillion by 2020, analysts say.
Last year, Islamic wealth manager Lotus Capital and the Nigeria Stock Exchange launched a debut index of the bourse-listed companies deemed compliant with centuries-old Islamic investment principles.
Oteh also said the regulator had licensed a new over-the-counter platform that will facilitate trading in shares of unlisted companies, a move she hoped would deepen the capital market and support companies raising long-term finance.
“We are essentially broadening the market to include unlisted securities. Think about all the public companies that are under the regulatory oversight of the SEC (but not listed) … the potential is enormous.”
In Nigerian law, any firm owned by more than 50 people is a public company.
Oteh said the stock exchange had developed a pipeline of firms in the telecoms, cement, power and oil and gas sectors for listing this year, marking the resumption of new issuance after the primary market for new shares dried up during a 2008 crisis.
President of Nigerian Bar Association (NBA), Okey Wali (SAN) has condemned the House of Representatives for its refusal to appropriate funds for the Securities and Exchange Commission (SEC) in the budget because of its face-off SEC’s Director-General, Ms. Arunma Oteh.
The House refused to invite Ms Oteh to defend SEC’s budget demanding her sack as a precondition for considering the budget.
Wali told The Nation in Abuja that the National Assembly is constitutionally empowered to make laws for the peace, order and good governance of the country. So, the Assembly should deal with institutions and not individuals in the performance of their constitutional duties for the benefit of Nigerians.
Wali frowned at the lawmakers’ demand for the sack of the SEC chief before they can approve funds for the SEC, describing it as interference with the functions of the executive arm of government.
He said the legislature should not interfere with the functions of the executive and, therefore, described this action as unconstitutional, ultra vires and inconsistent with democratic principles.
The NBA president said this is akin to the President Goodluck Jonathan saying that he would not approve budgetary allocation for the Assembly unless they remove some principal officers of the House, adding that the lawmakers action was as an abuse of legislative process.
Wali said the resolution of the House does not bind the President Jonathan because it is not a law, but the President should listen to them because the three arms of government should complement each other to ensure good governance”
The House of Representatives has said its probe of the administration of the Director-General (DG) of Securities and Exchange Commission (SEC), Ms Arunma Oteh, should not be confined to the allegation levelled against the chairman of the probe panel during the public hearing.
Deputy Chairman of the House Committee on Media, Hon. Afam Ogene, said the decision of the House not to appropriate funds to SEC for the 2013 fiscal year was not a vendetta against Ms. Oteh.
Speaking at the weekend, Ogene said members of the House and the director-general have been embroiled in a long-drawn battle since the probe of the commission by the lower chamber about one year ago, during which the DG accused the probe committee of demanding bribe from SEC.
The probe ended with a reprimand of Oteh by the Federal Government, but the lower chamber has maintained since then that Oteh must go.
He said: “The House had already begun investigations into the activities of SEC before the DG’s allegations against then – Chairman, Hernan Hembe, and the probe could just not be halted because of the allegation.
“Which one came first?” Ogene asked. “This same House was already having a public hearing on SEC when Oteh made her allegations. That an issue arose midway during an investigation shouldn’t abort a process that was already ongoing.
“During this process, issues had been raised regarding Oteh’s competence, regarding some resources of SEC that were paid into private accounts, issues bordering on corporate governance, whereby staff were recruited from outside the system and issues regarding indecorous working relationship with key commissioners in SEC.”
He added that the issues were already on top of the committee’s work before Oteh made her allegations.
“Up till now, they are still mere allegations because the parties involved are still in court,” he said.
“So, until Oteh proves her allegations, they remain mere allegations. So, the above issues had been established long before Oteh made her allegations,” he added.
THE Securities and Exchange Commission (SEC) has said the much-expected launching of the complaints framework by the commission will likely take longer than expected this year.
Speaking with The Nation yesterday, the spokesperson of the commission Mr Obi Adindu said: “There are a lot of impinging variables that will delay the launching of the complaint framework. A major one is the zero allocation for the commission in the 2013 budget.
“According to clause 10 of the budget, the commission is not allowed to spend any internally or externally generated fund.’’
For the input and enlightenment of stakeholders, he said they can have as much input as possible in the framework since it’s meant to work for the development of the capital market.
However, some shareholders said for the launching to be effective, investors’ input are paramount.
The SEC was, therefore, urged to carry the investors along.
Last year, the apex market regulator and market operators moved to introduce a harmonised complaint management framework to address complaint regime.
Zonal Coordinator, Independent Shareholders Association of Nigeria (ISAN), Mr Sunny Nwosu, said the commission has done any effective awareness campaign and as such, shareholders were not aware of the initiative.
Nwosu said: “Investors should be involved in the scheme of things because they are the major actors in the market and knows where the shoe pinches.”
He added that some investors lost confidence and interest in the market because of SEC’s inability to ensure speedy resolution of their complaints.
He however urged the commission to ensure good publicity and investor education for its policies.
Specifically, President, Progressive Shareholders Association of Nigeria, Mr Boniface Okezie, said the policy would not change investors’ perception of the market caused by the nationalisation of some banks
He said: “The commission should be proactive in its regulation and ensure investor protection to bring positive change in the market.”
Managing Director of Compass Securities Limited and the President of the Association of Stockbrokers of Nigeria (ASHON), Mr Emeka Madubuike, said the initiative would foster market transparency, investor protection, market integrity and high ethical standard.
Madubuike said it would boost investors’ confidence and make the market their preferred destination.
He noted that, “the state of complaints’ handling is far short of what is required in the market when compared with other emerging and developed markets”.
The Lagos Chamber of Commerce and Industry (LCCI) has criticised the zero allocation to Securities and Exchange Commission (SEC) by the National Assembly, urging the lawmakers to review their decision.
The Chamber’s Director-General, Mr Muda Yusuf, the stand of the lawmakers has many unintended consequences. This, according to him,include, perception and reputational risk for the stability and credibility of the capital market. It also has adverse impact on regulatory effectiveness in the capital market.
He said the law makers’ stand could reduce the recent gains of recovery and stability in the capital market and send wrong signals about the nation’s democratic process, especially the preservation of the tenets and values of separation of powers.
“We are concerned about the zero allocation to Securities and Exchange Commission (SEC) which is a strategic regulatory institution in the Nigerian financial system. We urge the National Assembly to review its position in the interest of the stability of the capital market, the nation’s financial system and the larger economy.
“We urge the National Assembly to look beyond the person of the Director-General of SEC, and give consideration to the wider implications of its decision for the economy.We believe there are adequate provisions in our laws and a multitude of state institutions that could be deployed to bring any erring public official to justice. This is a better option to explore rather than a clampdown on a strategic regulatory institution,” Yusuf said.
The Chamber commended the National Assembly on the early passage of the 2013 Appropriation Bill, saying that this has increased the prospect of improved budget implementation in 2013.
“We urge the President to demonstrate a similar spirit by promptly assenting to the bill. The differences in the oil price assumption between the Legislature and the Executive can be managed within a mutually agreed flexible implementation framework. After all, budgets are estimates which would, ultimately, be shaped by reality,” Muda said.
He said the early passage of the Appropriation Bill portends some benefits for the economy. These, according to him, will pave way for better planning space and time horizon for stakeholders in the economy because of the signalling effect of the budget from appropriation and policy perspectives.
The National Assembly allocated zero budget to the SEC, citing the Presidency’s refusal to remove its Director-General, Ms Arunma Oteh, from office in line with the law makers’ earlier recommendations.
•Suggests investigation, prosecution of Oteh
The Trade Union Congress (TUC) has criticised the approved zero allocation in the 2013 budget for the Securities Exchange Commission (SEC) by the National Assembly.
The congress, in a statement signed by its President-General, Comrade Peter Esele and Acting Secretary-General, Comrade Musa Lawal, said the lawmakers should follow due process by directing the Economic and Financial Crimes Commission (EFCC) to investigate and prosecute the SEC Director-General, Ms Arunma Oteh, instead of starving workers in the commission over ego feud that has nothing to do with the welfare of the workers and the nation’s economy.
It warned that such action by the lawmakers to cause more hardship on the workers as a result of the feud it had with the Director-General of the commission would incur the wrath of the workers.
The House of Representatives has failed to approve the budget of the SEC in the 2013 budget over a long-running feud Ms Oteh had with the House, after she accused members of a committee set up to probe the capital market of soliciting bribes from the commission.
The statement reads in part: “We are against the tough stance taken by the National Assembly on SEC by the approved zero allocation for the commission because such action by the lawmakers will bring untold hardship to the workers in the commission as a result of the feud.
“The organised labour will have no choice than to defend workers should their salaries from January 2013 be delayed over the feud.
“We call on the National Assembly to follow due process by directing the EFCC and any other government relevant anti-graft agency to investigate and prosecute the SEC director-general, instead of starving workers of the commission over ego feud that has nothing to do with their welfare and the nation’s economy.”
TUC said the National Assembly should be cautious in taking measures to tackle SEC, in order not to push the economy back into recession.
“We urge the National Assembly to take action by calling on the nation’s anti-graft agency to prosecute Ms Oteh, instead of infringing on the rights of the workers,” it added.
The National Assembly on Friday passed the 2013 budget with an increase from N4.92 trillion to N4.98 trillion. The figure has a difference of N62 billion as against the proposal presented by President Goodluck Jonathan in October.
Both chambers of the National Assembly considered a report of the Joint Committee on Appropriation and Finance on the 2013 Appropriation Act. The lawmakers warned that all unutilised capital expenditure in the 2012 budget should be rolled over to form part of the 2013 Appropriation Act.
They retained the $79 per barrel oil benchmark price for the budget, higher than the $75 a barrel proposed by the President.
President Goodluck Jonathan yesterday approved the appointment of new members of the Board of the Securities and Exchange Commission (SEC),with Dr. Suleyman Abdu Ndanusa from the North Central zone as chairman.
He takes over from Senator Udo Udoma.
Other members of the board, according to the Special Adviser to the Coordinating Minister for the Economy and Minister of Finance, Mr. Paul Nwabuikwu, are: Mallam Mounir Haliru Gwarzo ( North West ) Executive Commissioner; Mrs Sa’adatu Mohammed Bello ( North Central ) Executive Commissioner; Mr. Zakawanu Imhobobho Garuba (South South) Executive Commissioner; Adefunke Abiodun,( South West) Non-Executive Commissioner; and Mr Ugochukwu Ikemba (South East) Non-Executive Commissioner.
Nwabuikwu said the board’s reconstitution was “in line with the provisions of section 5 of the Investment and Securities Act 2007.”
The time has come for Nigeria to consider raising long term bonds to finance the agricultural sector, the Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina has said.
Speaking at a capital markets’ workshop, jointly hosted by the Securities and Exchange Commission (SEC) and Federal Ministry of Agriculture and Rural Development, Adesina said for Nigeria to secure the much-needed cheap long-term funds to finance its agricultural transformation, all stakeholders must think outside the box and proffer amenable and innovative financing means.
He said while the rising domestic debt is certainly of concern, this should not be used to argue against agriculture bonds, noting that many countries including China and India are using the so called green bonds to power their agriculture.
According to him,with AMCON having more than N3 trillion and pension funds having billions of Naira looking for sound investments, AMCON and pension funds can buy agricultural bonds to further diversify their portfolios and provide access to lower interest and long term financing for the sector.
He added that development finance institutions can also finance long term bonds for agriculture.
“To secure access to cheaper long term financing, we must think outside the box. The experience of the US offers some lessons. In 1916, the US government raised long term bonds, backed by government guarantees, to finance its agricultural sector. As a result, practically no farmer in the US takes credit from commercial banks, but rather through a system of specialised private sector agricultural lending institutions. US farmers therefore secure over $200billion in financing at 4.3 per cent interest rate, a critical factor that has made US agriculture productive and competitive,” Adesina said.
He outlined that equity markets can also enable agricultural companies to source the much needed capital pointing out that though agriculture has not been a big player in the Nigerian equity markets, it has the potential to be a big player.
According to him, emerging companies, such as Presco and Okomu, are charting the way for others to follow just as the ongoing plans of the Nigerian Stock Exchange to establish a secondary bourse that will allow for the listing of smaller capitalised companies should create greater access for smaller agricultural companies to the capital markets.
He noted that there were a number of strong agricultural companies that could seek to raise equity financing through initial public offerings (IPOs) but are unable to do so due to the minimum requirements of the NSE.
“Public equity capital markets should play stronger roles in financing the agricultural sector. Despite the strong performance of agriculture stocks, the sector still represents less than one per cent of the over $40billion market capitalisation on the Nigerian Stock Exchange. And only five of the 199 listed stocks are from the agricultural sector,” Adesina said.
He said the government would soon launch a Seed Venture Capital Fund that would be run by private equity managers to invest in existing and new seed companies adding that government is in the closing stage of receiving first-ever investments from KfW, the German Development Bank, for the establishment of a fund for agricultural financing.
“We must also use private capital markets. Private equity funds are increasingly playing a critical role in channeling financing to Nigeria’s agriculture sector.”