Adedapo Adesanya
By Adedapo Adesanya
As parts of its effort in maintaining fairness and reliability in the Nigerian capital market, the NASD Over-the-Counter (OTC) Securities Exchange has developed and unveiled its surveillance and compliance priorities for the year 2020.
In a circular obtained by Business Post, the exchange called on its registered Participating Institutions (PIs), who are also known as stockbrokers, to operate a separate settlement bank account for their transaction income different from the trading income generated through trade on other securities exchanges.
The stockbrokers were also directed to open the bank account under the NASD Trading Income Account and should be used solely for trading activities on its (NASD) platform.
“NASD shall periodically review the bank statements of Participating Institutions to ensure compliance with this requirement,” the circular issued on Friday, January 3, 2020, stated.
The exchange also ordered that Settlement Accounts should be funded appropriately before execution of transactions in order to protect market integrity and enhance transparency, adding that it will conduct a periodical review to ensure compliance.
On market manipulation, the bourse for unlisted stocks in Nigeria said it would strengthen its supervisory oversight on brokerage firms to detect and prevent market manipulation and promote a transparent, free and orderly market.
NASD Exchange further urged stockbrokers to develop their trading management systems which includes identifying transactions that are likely to constitute unfair trading, conducting trading surveillance based on the results of such identification, taking appropriate measures against inappropriate transactions and responding in good faith to inquiries or complaints on unfair trading.
In order to stop illicit funds into the market space, the exchange said all PIs must obtain full information on clients’ businesses and sources of income in order to ascertain the financial worth of clients and mitigate money laundering through the client’s information via valid means of identification such as International passport and National Identity card.
In addition, they were also required to immediately notify NASD of any changes in their corporate and business structure and operations.
Following the release of new regulations regarding insurance policies of capital market operators, NASD said that it will focus on each stockbroker’s compliance with the minimum capital requirements for business operations as set by the Securities and Exchange Commission (SEC) as regards appropriate computation of annual insurance policies.
The exchange said that it has put in place mechanisms for the early detection of the potential failure of any Firm and mitigation of client losses, noting that protection of clients assets was essential to it.
To further boost market integrity, NASD assured that it would work closely with SEC, the Central Securities Clearing System (CSCS), and other stakeholders to strengthen its data collection system in respect of brokerage companies.
