SEC Proposes New Cost Structure to Boost Capital Market

By Modupe Gbadeyanka

The Securities and Exchange Commission (SEC) is intensifying efforts to deepen the nation’s capital market by ensuring that more companies raise funds and get listed in the market.

The new issue market has been relatively dormant with initial public offering (IPO) drying up in recent times.

Although the market has witnessed the listing of two companies this year, the prospect of more companies coming to list is not very bright. However, in a move expected to attract more activities in the market, SEC has proposed a reduction in the cost of primary equity and fixed income issues.

However, the commission is seeking the contributions of stakeholders in the market before making the new fees operational.

In the proposed cost structure, the total primary fixed income issuance fees will be 2.293 percent, down from the current 3.9375 percent.

Similarly, primary equities issuance fees will be 2.833 percent as against 3.17 percent.

SEC will charge issuers 0.275 percent for any N500 million to be raised, as against 0.30 percent currently charge.

The next N500 million will attract 0.225 percent fees, while balance above N1 billion will attract 0.15 percent commission.

Also, NSE will charge listing fee of 0.25 percent on the Main Board subject to maximum fee of N200 million.

Listing fee for the Premium Board will be 0.25 percent of offer size subject to maximum fee of N400 million, while listing on ASeM attract flat fees of N100,000.

For fixed income primary issuance fees, the SEC is expected to charge 0.15 percent on the first N500 million being raised by an issuer compared to 0.15 percent of offer size previously charged.

The next N500 million will as well attract 0.145 percent fee, while balance above N1 billion will attract 0.1425 percent fee.

For the NSE, there is zero fee for companies already having equity listing, compared to 0.15 percent of offer size originally paid by issuers.

Issuing houses are expected to charge 1.35 percent for every initial N1 billion being raised by companies from the equities market, just as issuing houses are expected to charge 1.35 percent of offer size.

The next N1 billion will attract 1.225 percent fee, while balance over N2 billion will cost the issuer 1.15 percent of the offer size.

Furthermore, the Central Securities and Clearing System (CSCS)’ commission on N5million is fixed at 0.0075 percent of the offer size as against 0.01 percent currently charged.

But companies without equity listing are expected to pay 0.0375 percent issuance fee. While that of CSCS is capped at N5 million at 0.0075 percent of the offer size, stockbrokers are expected to collect 0.13 percent of offer size as fee.

However, the commission proposed 900 percent increase in registration filing fees for all categories of Capital Market Operators (CMOs), from N5,000 to N50,000, while processing fee is pegged at N200,000.

According to the proposed rule, registration for stock/commodities exchanges, bankers to an issuer, clearing and settlement agency/depository agency will go up by 900 percent from N100,000 to N1 million respectively, registration for an over-the-counter market is being raised to N1 million, while that of inter broker/dealer and capital trade points have been pegged at N500,000 respectively, among others.

SEC has given stakeholders up to March 28, to send in their contributions to the proposed fees structure before it will become operational.


Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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