Securities and Exchange Commision
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…towards a world-class market
The origin of the Securities and Exchange Commission dates back to 1962, when an ad hoc consultative and advisory body, known as the Capital Issues Committee, was established under the aegis of the Central Bank of Nigeria (CBN). Its mandate was to examine applications from companies seeking to raise capital from the capital market and recommend the timing of such issues to prevent issues clustering which could overstretch the market’s capacity. The Committee operated within the Central Bank of Nigeria unofficially as a capital market consultative and advisory body with no regulatory framework.
The first head quarters
An increase in the level of economic activities, coupled with the promulgation of the Nigerian Enterprises Promotion Decree in 1972, necessitated the establishment of a body backed by law to regulate capital market activities hence the creation of the Capital Issues Commission to take over the activities of the Capital Issues Committee. The Capital Issues Commission was established with the promulgation of the Capital Issues Commission Decree in March 1973.
The new body had a board of nine (9) members, including a representative of the Central Bank of Nigeria who served as Chairman, while the other eight (8) members were drawn from some Federal Ministries, the industrial and financial sectors of the economy.
In order to cope with emergent challenges, the powers of the Capital Issues Commission had to be further enhanced. A Financial System Review Committee was set up by the federal government to review capital market activities and proffer ways of developing the market. The recommendations of the Financial System Review Committee in 1976, led to the establishment of the Securities and Exchange Commission following the promulgation of the Securities and Exchange Commission Decree No. 71 of 1979 to supersede the Capital Issues Commission in 1979.
The Commission had more powers to regulate and develop the Nigerian capital market, in addition to determining the prices of issues and setting the basis for allotment of securities. Unlike its two predecessors, the Commission at this stage was excised from the CBN, although it continued to receive funding from the apex bank.
It also had an enlarged 12-member board with a CBN representative as Chairman. Other members were drawn from the Ministries of Finance, Trade and Industries, the Nigerian Stock Exchange and the Nigerian Enterprises Promotion Board; other members were nominated on the basis of individual merit.
The Commission took off effectively on January 1, 1980 with 51 staff out of which seven (7) were seconded (for a period of three years) from the Central Bank of Nigeria (CBN) while a few senior and support service staff were recruited.
Nine (9) years after the establishment of the Securities and Exchange Commission, the enabling law, Decree No. 7 of 1979, was re-enacted as SEC Decree No. 29 of 1988 with additional provisions to address observed lapses in the previous arrangement and to enable the Commission pursue its functions more effectively.
To further enhance the Commission's pursuit of its objective of investor protection, a review of the capital market was carried out in 1996 by a seven - man panel headed by Chief Dennis Odife. Based on the panel's recommendations, a new Act known as "The Investment and Securities Act No. 45 of 1999" was promulgated on May 26, 1999. The Act repealed the SEC Act of 1998. The new Act was expected to promote a more efficient and virile capital market, pivotal to meeting the nation's economic and developmental aspirations.
The Investment and Securities Act (ISA) was further reviewed, amended and subsequently passed into law in 2007. The SEC currently derives its powers from the ISA 29 of 2007.
The Securities and Exchange Commission (SEC) joined the International Organisation of Securities Commissions (IOSCO) in June 1985. The IOSCO is a body of Securities Commissions with the goal of cooperating in developing, implementing and promoting adherence to internationally recognised and consistent standards of securities market regulation. The Nigerian SEC qualified as an Appendix ‘A’ Signatory to the IOSCO MMOU in 2006 and has continuously been benchmarking its market rules and regulations against those of IOSCO, the global international standards setter.
Director General, Securities andExchange Commission, Ms Aruma Oteh
WHAT WE DO
The Securities and Exchange Commission, SEC is a government agency mandated to regulate and develop the Nigerian capital market.
In regulating the market, the Commission undertakes the following activities in order to protect investors, market operators and also ensure market integrity. Regulation is carried out through deployment of the following tools:
- Registration of securities and market intermediaries to ensure that only fit and proper persons / institutions are allowed to operate in the market. Instruments and persons registered in the market are:
- Securities/Commodity Exchanges/Capital Trade Points
- Futures, Options and Derivatives Exchanges
- Depository, Clearing and Settlement agencies
- Capital Market Operators:
- Issuing Houses
- Securities dealers/Stock brokers/Sub- brokers
- Registrars/Transfer agents
- Reporting Accountants
- Investment Advisers etc.
- Securities:Collective investment schemes
- Debt instruments
- Inspection either done “onsite” or “off-site”. The Commission, at regular intervals, calls for information from capital market operators. It also undertakes and conducts inquiries and audits of any participant in the market whenever necessary.
- Surveillance is carried out over exchanges and trading systems to forestall breaches of market rules as well as deter and detect manipulations and trading practices which are capable of causing market disruption.
- Investigation of alleged breaches of the laws and regulations governing the capital market and enforcement of sanctions where appropriate.
- Enforcement actions are taken against market operators who are found wanting after investigation is carried out, in minor cases, an all parties meeting is convened by the Commission where it mediates between parties involved in a dispute. However, if the case is serious or where no resolution is reached or a party fails to comply with a directive given at the all parties meeting, the defaulting party will be called before the Administrative Proceedings Committee (APC), which is a quasi judicial court, with only civil jurisdiction. Appeals against decisions of the APC are usually made at the Investment and Securities Tribunal (IST). Enforcement action may be in the form of payment of fine, ban, suspension or even forwarding the case to the Nigeria Police Force (NPF), Economic and Financial Crimes Commission (EFCC) or the Attorney - General of the Federation (AGF) where allegations are found to be criminal in nature.
- Rule making by the Commission as developments occur. This is to ensure that the Commission meets up with international best practices.
In the area of market development, the Commission collaborates with relevant stakeholders to introduce new products and processes. The SEC encourages improved investor participation in the market through any or a combination of the following activities:
- Workshops and seminars
- Town hall meetings
- Television/Radio programmes
- Introduction of e-processes e.g. e-dividend, e- allotment, etc
- Secondary school quiz and essay competitions
- Introduction of capital market studies in tertiary institutions
- Publications (i.e. Journals, bulletins and cartoons)
Our culture is built on a core system of values which are pivotal to the actualization of our mission and sustenance of our vision. Together, our mission, vision and values constitute the cornerstone of our corporate philosophy.
To develop and regulate a world class Capital Market with the capacity to contribute to the Nation’s economic development
To be a leading Capital Market Regulator
We approach each task with tunnel vision. Our staff fully understand the inter-dependence of all aspects of our operations and the attendant impact on the market. We follow all tasks through to conclusion with unwavering commitment.
Underpinning the essence of our oversight function is our passion to operate beyond ordinary standards. We will ensure outstanding fitness of purpose and impeccable standards of performance in all that we do.
We understand that efforts are only as good as their outcomes; we shall maintain our focus on attaining desired market results with a strong sense of duty and consistency.
We understand that innovation is an indispensable attribute of relevance. We shall strive to continually improve ourselves across all facets of our operations leveraging laws, technology, knowledge, people and processes.
In our quest to nurture a world-class capital market, we shall continue to lead by example. We shall task the system with extra ordinary feats and challenge our peer agencies to higher echelons of performance.
Our operations shall remain untainted with neither prejudice nor bias. We shall operate in the best interest of the market without or fear, favour or deference to any party.
Volatility and change are indigenous to the capital market; therefore, we shall continue to initiate, anticipate and embrace change. Contingency planning, forecasting and our self-initiator culture will guide our response to spontaneous developments.