The Nation Newspaper

Tag: Securities and Exchange Commission (SEC)

  • Welcome, but …

    •Coming of Lagos commodity exchange good, but regulation is the issue

    THAT the Securities and Exchange Commission (SEC) finally approved the application from Lagos Commodity and Futures Exchange, LCFE, for the commencement of commodities and futures trading is no doubt a welcome development. The step, another boost to the efforts of SEC to deepen the capital market obviously aligns with the current moves by the Federal Government to diversify the Nigerian economy and to strip it of the perennial fluctuations associated with the global oil market. It comes as an addition to the two commodity exchanges already in place, both based in Abuja: the Abuja Securities and Commodities Exchange (ASCE) founded in 1998, and AFEX Commodities and Exchange Limited, both of which are primarily devoted to commodity trading.

    Why is the coming of LCFE important at this time?

    First, to the extent that the economy needs all the help that it can get to keep it on an  even keel, its coming on board certainly broadens the range of products on offer and, with it, the direct potential of helping to deepen activities in that segment of the capital market. Second, that the promoters of the exchange have plodded on despite the stifling challenges can only mean that the environment is not only increasingly conducive but continues to show forth great promises.

    To the two above we can add the coming of age of the commodity and future markets in the Nigerian environment. Given that a major bane in our production/trade cycle, particularly of agriculture products, is the factor of uncertainty/unpredictability that often characterises them, the buying, selling or trading in various commodities at current or future date –which the market is all about – will surely help to lessen, if not remove outright, the perennial cycle of fluctuations and instability.

    Merely by the various initiatives of the Federal Government to boost agricultural output across the board, there would seem no better time than now for the  LCFE, to come on board.

    However, a commodity and futures market can only deliver to the extent that the other significant variables in the larger economy allow. With agricultural practices still largely dependent on the vagaries of weather, and other acts of nature as frequent as to render output unpredictable, nothing of stability of the commodity exchange market can be guaranteed or held as sacrosanct.

    Add to this the fact that agricultural insurance remains at a rudimentary level. The latter in particular renders the risk of a futures contract, even with the best of intentions, frustratingly high. Also well-known are the constraining factors of poor transportation infrastructure, poor access to credit and extension services – all of which combined still render the sector, a non-starter.

    We expect the Federal Government to tackle these challenges with greater vigour if only to provide the enabling environment for the sustainability of the exchange.

    The other issue is whether SEC is ready for the rigorous challenge of regulating this segment of the market, particularly as Nigerians would readily recall how lax regulatory oversight and sharp practices by banks and brokers precipitated the crash of the Nigerian bourse in 2008; how from the then all-time high of N13.5 trillion market capitalisation in March 2008, the market plunged to less than N4.6 trillion by the second week of January 2009 – from which it has not fully recovered till date.

    For SEC, the challenge goes beyond throwing the door open; it is more about getting players of all shades to play by the rules and to punish infractions whenever they occur. The least Nigerians expect from SEC at this time is its preparedness for the growing number of the exchanges.

  • SEC invades Oando with armed policemen

    Armed security personnel, acting on the directive of the Securities and Exchange Commission (SEC) on Thursday allegedly invaded Oando’s head office in Lagos and disrupted the firm’s business operations.

    The security personnel became residents in Oando’s Ozumba Mbadiwe office since June 3, and are said to be present at the reception, of all the  office floors as well as the stairways, intimidating employees from doing their business for fear of accidental discharge.

    An employee of one of the corporate tenants at the Wings Office Complex head office said he was shocked when he got to the office to see so many armed personnel on the ground floor.

    A letter from the Lagos Commissioner of Police clearly explained that policemen were deployed to Oando on the directive of SEC Director-General to maintain law and order.

    A legal practioner, Nkechi Agbanusi, said: “The SEC’s actions is  what you can describe as dictatorial democracy, on the surface they are the regulator with the best interest of the market at heart, but in truth they are destroying value.”

    Prof Pat Utomi said the greatest risk of doing business is not a market risk but regulatory risk and the general attitude of the government to business.

    He said: “The problem with institutional growth in Nigeria was the way Africans relate to being in authority positions. To give a uniform of authority to most in Africa was to make them bullies instantly. Just watch the policeman, soldier, LATSMA personnel etc. deal with the public.”

    This is the exact case with the SEC, which as a result of being in a position of power, is going against the laws of the country.

    Read Also: Stakeholders slam SEC over Oando

    This SEC and Oando saga is not playing out well, the regulator seems focused on one goal and achieving this goal by any means necessary including using innocent parties such as the police as well as taking steps that are heavy handed, unreasonably forceful and intimidating in nature.  In the process they are calling to question, the role of the regulator and in a manner that will have far reaching implications in the long term.

    “It just seemed odd when I saw all these policemen but I didn’t take much notice – the building has quite a number of tenants so I didn’t think too much about it.  Later in the day, everybody in the office was talking about how they had taken over the Oando offices and then I became worried.  Having no idea what the issue is with Oando, I was worried about the outcome of a full blown altercation with armed personnel.  You know  one has to be careful when dealing with someone with a gun,” he said.

    The presence of the armed men on the directive of SEC has intimidated the company’s employees and disrupted normal business activities.  The disruption to normal business will not only adversely affect the company but  the country at large as its shares has seen a downward spiral since the SEC directive.

    A letter from the Lagos Commissioner of Police clearly stated that policemen were deployed to Oando on the directive of SEC Director-General to maintain law and order.

    The question is to date has Oando acted in any way that indicates that it is in the habit of contravening law and order? If no, then what was the rationale for  SEC taking steps that can only be perceived as unnecessary intimidation, an analyst said.

    A a legal practioner, Nkechi Agbanusi, said: “The SEC’s actions is  what you can describe as dictatorial democracy, on the surface they are the regulator with the best interest of the market at heart, but in truth they are destroying value.”

    Prof Pat Utomi said the greatest risk of doing business is not a market risk but regulatory risk and the general attitude of the government to business. He  said: “The problem with institutional growth in Nigeria was the way Africans relate to being in authority positions. To give a uniform of authority to most in Africa was to make them bullies instantly. Just watch the policeman, soldier, LATSMA personnel etc. deal with the public.”

    This is the exact case with the SEC, which as a result of being in a position of power, is going against the laws of the country.

    This SEC and Oando saga is not playing out well, the regulator seems focused on one goal and achieving this goal by any means necessary including using innocent parties such as the police as well as taking steps that are heavy handed, unreasonably forceful and intimidating in nature.  In the process they are calling to question, the role of the regulator and in a manner that will have far reaching implications in the long term.

     

  • SEC, NSE streamline listing process to encourage more listings

    The Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) have moved to make the processes involving listing on the NSE more efficient and cost effective by streamlining the approval process between the SEC and the NSE.

    The streamlined process which will come into effect on June 1, 2019, is aimed at reducing the regulatory burden on issuer’s by eliminating duplication of processes between the SEC and the NSE, reducing the time to market for the issuance and listing of securities and ultimately driving more listing on the Exchange.

    According to a statement by the SEC, with the streamlined processes, the SEC and the NSE will carry out joint site visits of companies intending to get listed, following the registration of their securities with the SEC.

    In the same vein, certain offer documents such as the Vending Agreement, Underwriting Agreement, Trust Deed and ISPO, identified to be strictly within the jurisdiction of the SEC are to be submitted only to the SEC.

    Read Also: On Emiefele’s second term

    Also, The NSE will rely on SEC for approval of offer documents such as a Prospectus.

    The Ag. Executive Commissioner Operations at the SEC, Mr. Isiyaku Bala Tilde disclosed that “Streamlining the issuance process with the listing process of the NSE is a major milestone for the Commission in its quest to create an enabling environment capable of attracting New Listings.

    “One of our core values is leading by example, and we hope that other stakeholders will also look inward to explore similar initiatives which will ensure quick time to market of securities in our market.

    “We have no doubt that the streamlined process will enhance the competitiveness of the Nigerian capital market as a global investment destination.”

    Speaking on this development, Executive Director, Regulation at the NSE Ms. Tinuade Awe, said, “I commend the SEC for working with using streamlining the listing process for securities on The Exchange.

    “The NSE is much obliged for the SEC’s demonstration of a worthy example of effective collaboration all through this process in the interest of the market.

    “As an agile exchange, we are determined to make it easier for issuers to list their securities in our market in an efficient, timely and cost effective manner.

    “The NSE began its collaboration with the SEC by identifying areas of duplication and overlap between the two organisations, paving way for a better experience for issuers.

    “We believe this will potentially attract more issuers to list their companies and other securities on the NSE.”

  • Mergers & acquisitions: SEC to realign rules as new Commission takes off

    Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC), will now restrict regulatory activities on mergers and acquisitions to public companies and change of shareholding of capital market operators.

    The modification of the regulatory purview of SEC comes on the heels of the February 5, 2019 signing into law of the Federal Competition and Consumer Protection Act by President Muhammadu Buhari. The law provides for the establishment of the Federal Competition and Consumer Protection Commission and the Competition and Consumer Protection Tribunal. The new law repeals sections 118, 119, 120, 121 (excluding S. 121(i) (d)), 122, 123, 124, 125, 126, 127 and 128 of the Investments and Securities Act (ISA), 2007, the enabling law for SEC.

    In a circular, SEC indicated it would undertake a review of its regulatory oversight on mergers and acquisitions as well as applicable fees and guidelines.

    With the Federal Competition and Consumer Protection Act, the role of SEC in relation to mergers will be restricted to mergers and acquisitions by or involving public companies as well as transactions involving a change of shareholding of capital market operators.

    However, if a private company is to be merged with or acquired by a public company, the public company still has a duty to obtain the “No Objection” approval of SEC.

    The review and approval by SEC on mergers will be restricted to primary objective of determining “whether all shareholders are fairly, equitably and similarly treated and given sufficient information regarding the merger”. The Federal Competition and Consumer Protection Commission on the other hand will consider the anti-competitive effects of a transaction in a relevant market.

    SEC will meanwhile continue to enforce compliance with the takeover provisions and monitor acquisition of shares of public companies as enshrined in the ISA, 2007.

    SEC will also continue to oversee corporate restructurings. Every public company undertaking a proposal, scheme, transaction, arrangement, or activity or issue of securities or offer for subscription or purchase of securities in relation to conversion of a public company or the reconstruction of it shares; a carve-out, spin-off, split-off or other form of restructuring of its operations; acquisition or disposal of asset which results in a significant change in the business direction or policy of a public company or any other listed entity whether or not in relation to any proposal, scheme, transaction, arrangement or activity; shall obtain the “No Objection” approval of the Commission.

    However, all completed applications currently filed with SEC prior to the effective date of the Federal Competition and Consumer Protection Act and for which appropriate processing fees had been paid would be continued and completed by SEC.

     

  • SEC, NIPC collaborate to attract investors

    The Securities and Exchange Commission (SEC), in its effort to attract more investors, thereby boosting the economy, has restated its commitment to partner the Nigerian Investment Promotion Commission (NIPC).

    Acting Director General of the SEC, Ms. Mary Uduk stated this in Abuja when she received the Executive Secretary of the Nigerian Investment Promotion Commission (NIPC) Ms. Yewande Sidiku in Abuja.

    Uduk said that it is in furtherance of its objectives of attracting more investors to the capital market that the SEC is poised to revitalize the commodities exchange market among other initiatives.

    “There are opportunities in the Commodities market and we need to scale up participation in that regard to attract investors. And we will require the collaboration of the NIPC in that regard as the direct investors you are seeking to attract.

    “Various opportunities abound in the capital market for both individuals and government and that is why we are exploring avenues to attract states to come to the market and raise funds for infrastructural projects. We are happy to partner with you to make the market and the country richer and better,” Uduk said.

    Read Also: SERAP: scrap security votes, immunity clause, others

    In her remarks, the NIPC Executive Secretary, Yewande Sidiku said the Commission is committed to ensuring that the nation has the required business climate to attract both foreign investors and Nigerians in the Diaspora.

    She said the Commission is visiting different states to explore investment opportunities and also looking at some investments that were started by states but are now moribund and find ways to revitalize them.

    “There are many investment opportunities in the states and what we have done now is to design a platform for profiling such investment opportunities. Part of the strategy is to enlighten the state officials as it is important that the states are ready for the investors,” Sidiku stated.

    She said the mandate of the Commission is to encourage investors to come and that is why incentives are being put in place to make it easier for them to come.

    “The work that we do is connected to the work of the SEC, we encourage investors to come while the SEC is here to protect the investors and that is why we need to collaborate. We are happy to work with the SEC to further grow our economy.”

     

  • Access Bank/Diamond Bank not merged yet – SEC

    Following  reports of merger by the boards of Diamond and Access banks, the Securities and Exchange Commission (SEC) has said that both banks are yet to formally merge.

    The nation’s apex Capital Market regulator explained that the process is not yet completed, even as it awaits their application on the matter.

    The SEC in a statement said: “Access bank and Diamond Bank have both notified the Commission and the general public. It is a notice to merge, they have not merged yet. SEC is awaiting their application on the matter.

    Read Also: Diamond Bank confirms merger with Access Bank

    “The SEC received on Monday, Dec 17 2018, notice of intention by Diamond Bank & Access Bank to merge. The Commission is currently waiting for their formal Application”.

    The completion of the merger is subject to certain shareholder and regulatory approvals expected to be completed in first half of 2019.

  • SEC launches green bond rules

    The Securities and Exchange Commission (SEC) officially launched the Green Bonds issuance rules at a ceremony on Monday.

    Speaking at the launch of the rules, Ms. Mary Uduk, Ag. Director-General, SEC stated that, “As Nigeria strives to harness the resources of non-oil sectors to anchor the transition to a more resilient economy, there is the urgent need to close the country’s infrastructure gap with investments in sustainable finance initiatives.

    “The SEC’s release of the green bond rules is a significant step in furthering the complementary efforts of the government, regulators and the financial services industry to direct financial capital to more sustainable economic activity”.
    Green bonds are special bonds issued to finance or re-finance in part or in full new and existing eligible environmental or climate projects.

    According to Dr Evans Osano, Director of Financial Markets at the Financial Sector Deepening Africa (FSD Africa): “We laud SEC Nigeria for the professional and quick turnaround in the preparation of the guidelines.

    “The new guidelines are prepared in line with leading international guidelines and standards providing confidence to domestic and international investors.

    “It also provides certainty to issuers of green bonds in Nigeria. FSD Africa is pleased to have supported this process which is a milestone for the Nigeria green bonds market”

    Mr. Olumide Lala, Africa Markets Programme Manager, Climate Bonds Initiative, explained that “the launch of the rules brings much needed clarity and guidance on the issuance of green bonds.  Adopting the tenets of the Green Bond Principles and Climate Bonds Standard makes it easier to attract foreign investment where needed.”

  • SEC reaffirms commitment to deepen capital market

    Securities and Exchange Commission (SEC) in its moves to deepen the Nigerian Capital Market and bolster liquidity has reaffirmed its commitment to its 10-year master plan which began in 2014.

    Ms Mary Uduk, the Acting Director-General, SEC, who made this known on Thursday at the SEC Journalists Academy in Uyo, explained that the Nigerian Capital Market Master Plan (2015-2025) by the Commission in collaboration with other stakeholders was to improve key areas especially investor protection and education, professionalism, product innovation, and for the expansion of the capital market’s role in Nigeria’s economy.

    According to her, “It is our resolve to remain committed to developing our capital market in line with the 10-Year Master Plan.”

    “In March 2008, market capitalization reached a then all-time high of N12.6 trillion. Specifically, in 2005/2007, recapitalizing banks and insurance companies raised over $10 billion from the capital market.

    “However, the All-Share Index (ASI) dropped by 52.6% by December 31, 2008 from the high in early 2008 while average daily trading volume also dropped by about 77% of high levels.

    “The Nigerian stock market between March 5 and December 31 2008 therefore lost about N5.7 trillion, or 45.1% in value,” she said.

    This she explained was due largely to dominance and concentration of the market by the banking sector which constituted 60% of the market then.

    According to the SEC boss, “15 out of 20 most capitalized companies were banks.

    Read Also: SEC urges shareholders to dematerialize certificates

     

    “Risk management and corporate governance was not developed enough to support the fast growth thereby leading to inappropriate market behavior and abuse of margin lending.

    “One of the resultant effects of the downturn was loss of confidence in the market by investors and since then they have not fully returned to the market.

    “Meanwhile, from 2008 to date, the Commission had focused on leading the market to recovery.”

    Cross Section of the Participants at the SEC Journalist Academy 2018 held in Uyo, Akwa Ibom

    Dematerialization, e-dividend, and Direct Cash Settlement were some of the sundry initiatives by the Commission to ensure that the market not only recovers, but thrives to become Africa’s most efficient Capital Market.

    “The recapitalization of capital market operators was aimed at improving the baseline infrastructure of the CMOs, improves their market access and service delivery as well as enable them comply fully with the New Minimum Operating standard set by the Commission.

    “These were aimed at helping the market develop robust controls; strong governance framework and effective human capital.

    “As at December 30, 2016 which was the deadline given for all CMOs to recapitalize, 384 out of 449 CMOs had fully complied. More of them have done so afterwards.

     

    “Similarly, the National Investor Protection Fund (NIPF) was established to compensate investors for pecuniary losses, boost their confidence and encourage the domestic retail investors back to the market,” she said.

  • SEC urges shareholders to dematerialize certificates

    In its effort to increase market growth, efficiency and transparency, the Securities and Exchange Commission (SEC), has urged members of the public with physical certificates of shares to take advantage of the dematerialization initiative of the commission to convert it to electronic format.

    The Acting Director General of SEC, Ms. Mary Uduk made this known on Thursday during the 2018 SEC Journalists Academy in Uyo.

    According to her, “We have ensured that all share certificates are fully dematerialized. This is to say that physical share certificates are now fully converted into electronic form in Nigeria.  This initiative has further enhanced the market efficiency and transparency.”

    According to Mr. Henry Rowlands, The Ag. Executive Commissioner (Corporate Services) of SEC: “The advantage of dematerialization is the availability of your money any time you need it. It is held electronically on the data base of the Central Securities Clearing System (CSCS).

    “If at any point in time you want to transact business, you just contact your registrar and instruct them to make the conversion of your physical certificates to electronic format, and it is available for transfer to you. You don’t need to wait all day.

    “Another advantage is that the age of lamination of certificates are no more. You no longer have to worry about theft, flood, fire or any other potential destruction to your certificate.”

    Henry explained that people (beneficiaries) that have plenty of shares bequeathed to them can easily convert those shares in the event of the death of the original share owners.

    An investor who wants to dematerialize his shares need to open a “demat account” in the Central Securities Clearing System (CSCS) through a stockbroker of his choice. In return he gets electronic shares in his demat account.

    Also, concerning electronic dividends (e-dividends), Henry explained that e-dividend is a secure online means of paying dividends to shareholders.

    “When we are talking of digitization, anybody that does not have e-dividend mandate may still suffer loss.

    “The Capital Market through the initiative of the SEC no longer prints warrants. So if you do not mandate your preferred account to receive electronic payments of dividends, then your dividend may not get paid to you.

    Read Also: CBN targets stable exchange rate to protect Naira’s strength

     

    “It enables you never to go to the bank anymore, and enables you to get your dividend within 24 hours of its declaration.

    “Also, you don’t need to come to Lagos to see your registrar, all you need to do is go to SEC’s website, download and complete the company’s form and walk up to the nearest branch of your bank. This is facilitated on the platform of the Bank Verification Number (BVN).

    “Once you do this, all outstanding dividends will automatically be paid to you,” he said.

    He further added that: “Direct Cash Settlement is a sole means to ensure that your investments are secured. It is assumed before now that when you give mandate to a broker, some of them after selling on your behalf, receive the main proceeds from CSCS into their account.

    “With the regime of Direct Cash Settlement, rather than wait for the stockbrokers to get the money and transfer to you, when you register, the net proceeds of your investment which you have sold, goes to your preferred account.

    “We encourage people for the safety of their investments to key into the Direct Cash Settlement.”

  • Financially excluded a minus to our GDP – SEC

    Securities and Exchange Commission (SEC) has lamented the non-participation of those in the grassroots in the financial sector, noting that this has affected the Gross Domestic Product (GDP) of the country.

    SEC’s Acting Director-General, Mary Uduk, stated this during its financial inclusion sensitization programme in Gwagwalada Area Council, Abuja, on Thursday.

    Uduk, who was represented by Head of Investor Education at the commission, Francis Okafor, stated that the sensitization programme hopes to enlighten those at the grassroots, and educate them on how to invest in the Capital Market and the financial industry.

    She said the target of the commission is to ensure that by the end of this year, every area council in Abuja is reached.

    Uduk said: “The last sensitization programme for this year will be held in Abaji area council. We want to ensure that by the end of this year, every area council in Abuja is reached.

     “If you buy shares, you are sure to get it back (dividends). Pension is not only for civil servants, but also for business people through the Micro Pension Scheme; that is why we have partnered PenCom.

    “In Kano we talked about commodity ecosystem and non-interest finance. It was quite successful in Kano.

    “Commodity Ecosystem is all about commodities – agricultural products. In the hay days of this country, we had things like the groundnut pyramids etc., today, those thing have died down. Beyond oil, Agriculture is a sector that can bring this country into limelight.

    “We hope to establish and increase commodity exchange that will compete, if not better than what we have today in the stock exchange.

    Read Also: Nigeria’s GDP contracts as oil production slumps

    “A committee has submitted a report on the Commodity Ecosystem; we are currently at the implementation stage.

    “We have partners and collaborators under financial inclusion. We have the Nigeria Deposit Insurance Commission (NDIC), National Pension Commission (PenCom), National Insurance Commission (NAICOM) etc.”

    The apex regulator of the capital market encouraged participants to embrace collective investment schemes like the Esusu and others that are regulated by SEC. Explaining that the Sukuk which is a non-interest finance scheme, is not a purely religious arrangement that excludes everyone else, urging participants to engage it.

    Head of Awareness Unit of Micro Pensions Department of PenCom, Mr. Emeka Onuora, said: “Micro pension is part of the Contributory Pension Scheme (CPS). It is a coverage extension of the CPS.

    “We have always placed emphasis on those that are working in government offices under the CPS; this time around, we want to include individuals working on their own. We want to educate them on the need to make provisions for their retirement regardless of whether they are working on their own.

    “For the Micro Pension Scheme (MPS), you have to be registered to get started just like you get registered under the CPS with Pension Fund Administrator (PFA).

    “When it comes to making payments (contributions), you can use your phones, ATM cards, USSD, banks, etc.

    “For the Micro Pension Scheme, you are not compelled on the amount you have to pay or the frequency of payment. You can pay in daily, weekly or monthly.

    “The MPS has incentives such that you have access to a certain percentage of your contributions for everyday expenses; this amounts to 40%. The other 60% is kept for your pension and is being invested by the Pension Fund Administrator so that when you retire, you are guaranteed your pension.”