SEC Makes Clarification on Registration of Dealing Members

By Modupe Gbadeyanka

Nigeria’s Securities and Exchange Commission (SEC) has made clarifications concerning the registration of dealing members in the capital market in the country.

In a circular issued on Friday, December 16, 2016, the capital market’s regulatory body emphasised that it is the only agency empowered to register members and no other institutions.

SEC explained that the clarification became necessary following a “circular issued by a regulatory institution directing some persons to register as dealing members with the FMDQ OTC Securities Exchange, an exchange registered by the commission.”

Quoting Section 38 of the ISA, 2007, the agency stressed that “no person shall operate in the Nigerian capital market as an expert or professional or in any other capacity as may be determined by the Commission; or carry on investments and securities business unless the person is registered in accordance with the Act and the rules and regulations made there under.

“Furthermore, Section 315 of the Investment and Securities Act (ISA), 2007 defines a dealing member as ‘a body corporate which is a member of a recognized Securities Exchange and is licensed to engage in dealing in Securities on that exchange.’

“By the above provisions of the law, only dealing members registered by the Commission are permitted to engage in capital market activities in the Nigerian capital market.

“Consequently, the Securities and Exchange Commission as the Apex regulator of the Nigerian capital market wishes to state as follows:

“By virtue of Section 13 (g) of the ISA, the Commission is responsible for the registration of all corporate and individual market operators;

“Only persons registered by the Commission are permitted to operate in the Nigerian Capital market and as such, on all platforms registered by it.”

SEC emphasised that it would not “hesitate to take appropriate enforcement action against any person found to be in violation of the provisions of the ISA 2007 and the Rules and Regulations made pursuant thereto.”

Concluding, the agency pointed out that while it “remains supportive of initiatives geared towards advancing the Nigeria capital market, such initiatives must confine to the prevailing legislative regime.”