Economy
SEC Proposes Rule to Protect Investors, Stockbrokers from Risks, Losses
By Dipo Olowookere
A rule to look into issues associated with stockbroking operations and protect investors in the event of the occurrence of the risk or loss insured is being proposed by the Securities and Exchange Commission (SEC).
In a disclosure, SEC said guideline, which will come under Rule 27A is mainly “to exempt capital market experts/professionals from maintaining fidelity bonds and enable the establishment of an insurance product for dealing members of securities exchanges to cover the risks associated with stockbroking operations and protect investors in the event of the occurrence of the risk or loss insured.”
The apex capital market regulator tagged the proposed rule as Insurance Policy for Corporate Bodies Licensed as a Dealing Member of a Securities Exchange.
In the existing Rule 27, which talks about Fidelity Bond, states that, “Every registered corporate body shall provide and maintain a bond which shall be issued by an insurance company acceptable to the Commission against theft/stealing, fraud or dishonesty, covering each officer, employee and sponsored individual of the company.”
But SEC wants this amended to “Every registered corporate body other than a corporate body licensed as a dealing member of a securities exchange and capital market experts/professionals shall provide and maintain a bond which shall be issued by an insurance company acceptable to the Commission against theft/stealing, fraud or dishonesty, covering each officer, employee and sponsored individual of the company.”
In the new rule, the agency is proposing that, “Every registered corporate body licensed as a dealing member of a securities exchange shall procure and maintain an insurance policy issued by an insurance company acceptable to the commission. The policy shall cover all aspects of the insured business activities and risks including but not limited to the following:
“(a) fidelity guarantee against theft/stealing, fraud or dishonesty, covering each officer, employee and sponsored individual of the company;
“(b) professional indemnity in respect of loss arising from any claim or claims for any act or omission or breach of duty by officer, employee and sponsored individual of the company;
“(c) directors liability in respect of claims against wrongful acts committed in the capacity of a director;
“(d) legal liability, or other third-party claim;
“(e) other risks associated with its products and services.
“Provided however that the insurance policy shall take into consideration the situation whereby the dealing member is a member of multiple securities exchanges.”
It is also considering a rule that will make “every corporate body licensed as a dealing member of a securities exchange shall procure and maintain an insurance policy which shall where applicable, as may be determined by a securities exchange, name the securities exchange’s investors’ protection fund as the co-insured.
“Payments from the policy shall be utilized by the securities exchange’s investors’ protection fund towards compensating investors who have suffered losses on their securities traded on a securities exchange from the occurrence of the risks covered by the insurance policy.
“Provided however that where the dealing member is a member of multiple exchanges, payment shall be made to the relevant securities exchange where the defalcation occurred.”
In addition, it is proposing that, “The insurance policy maintained by a dealing member of a securities exchange shall provide that payment under the insurance policy can be made directly to the:
“(a) securities exchange’s investors’ protection fund which shall compensate investors who have suffered losses or;
“(b) affected dealing member with the prior written consent of the securities exchange’s investors’ protection fund.”
“The insurance policy shall provide that it shall not be cancelled, terminated or modified by the dealing member of a securities exchange without the prior written consent of the securities exchange’s investors’ protection fund and the commission. Where the cancellation, termination or modification is at the instance of the insurance company such cancellation, termination or modification shall not be carried out except after written notice shall have been given by the insurance company to the commission and the securities exchange’s investors’ protection fund, not less than sixty (60) calendar days prior to the effective date of cancellation, termination or modification.
“The insurance policy shall be provided in such reasonable form, terms and under such premium as the fiduciary duties of the officer, employee or sponsored individual require, but with due consideration to all
relevant factors, including but not limited to the risks insured, products and services, clientele, the value of the aggregate assets of the dealing member of a securities exchange in relation to all its registered functions, to which any officer, employee or sponsored individual may have access, the type and terms of the arrangements made for the custody and safekeeping of assets and securities in the company’s portfolio,” it added.
“The insurance policy shall cover not less than 20% of the minimum paid up capital of the dealing member of a securities exchange.
“Every dealing member of a securities exchange shall file with the commission and the securities exchange:
“(a) a statement of the nature and value of a claim within five (5) business days after the making of any claim under the insurance policy; and
“(b) a copy of the terms of the settlement of any claim made under the insurance policy within five (5) business days of the receipt thereof.
“Every securities exchange on the advice of the securities exchange’s Investor Protection Fund (IPF) shall provide quarterly reports to the commission on all claims settled under the insurance policy, and the report shall include the name of the investor and the sum received under the insurance policy.”
By Adedapo Adesanya
The duo of MRS Oil and FrieslandCampina Wamco Nigeria Plc weakened the NASD Over-the-Counter (OTC) Securities Exchange by 0.68 per cent on Friday, June 5.
MRS Plc lost N19.00 during the session to sell at N171.00 per share compared with Thursday’s value of N190.00 per share, and FrieslandCampina Wamco Nigeria Plc depreciated by N8.70 to finish at N181.68 per unit compared with the preceding session’s N190.38 per unit.
As a result, the market capitalisation further lost N22.59 billion to close at N2.607 trillion versus the N2.630 trillion it ended a day earlier, and the NASD Unlisted Security Index (NSI) dropped 37.76 points to settle at 4,358.32 points, in contrast to the previous day’s 4,396.08 points.
The alternative stock market closed the last trading day of this week with a price gainer, Central Securities Clearing System (CSCS) Plc, which gained 6 Kobo to quote at N78.40 per share compared with the preceding session’s N78.34 per share. However, it could not prevent the market from going down at the close of business.
Yesterday, the volume of securities bought and sold by investors went down by 50.0 per cent to 140,345 units from the preceding day’s 280,714 units, the value of stocks decreased by 16.5 per cent to N17.9 million from the previous session’s N21.5 million, and the number of deals carried out by market participants fell by 35.7 per cent to 27 deals from the 42 deals recorded on Thursday.
When trading activities closed for the day, Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis, with 3.4 billion units exchanged for N8.4 billion, trailed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and CSCS Plc with 64.7 million units traded for N4.4 billion.
GNI Plc also ended the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units transacted for N6.5 billion, and Resourcery Plc with 1.1 billion units valued at N415.7 million.
By Dipo Olowookere
Renewed interest in financial stocks and others lifted the Nigerian Exchange (NGX) Limited by 0.15 per cent on Friday.
Customs Street closed higher yesterday despite the 1.37 per cent loss recorded by the consumer goods sector as a result of profit-taking.
This was offset by gains in the other key sectors of the local bourse, as the insurance counter chalked up 1,14 per cent. The banking space appreciated by 0.90 per cent, the industrial goods segment grew by 0.46 per cent, and the energy sector expanded by 0.01 per cent.
Consequently, the All-Share Index (ASI) went up by 366.00 points to 242,593.31 points from 242,227.31 points, and the market capitalisation gained N235 billion to close at N155.594 trillion compared with the previous day’s N155.359 trillion.
The trio of International Energy Insurance, Abbey Mortgage Bank, and DAAR Communications improved by 10.00 per cent each yesterday to N7.26, N9.35, and N1.98, respectively, while Zichis advanced by 9.39 per cent to N32.38, with Sovereign Trust Insurance up by 8.70 per cent to N2.50.
On the flip side, Academy Press lost 9.84 per cent to quote at N8.25, University Press depreciated by 9.73 per cent to N5.10, Africa Prudential dipped by 2.63 per cent to N12.95, Chams crumbled by 2.44 per cent to N4.00, and International Breweries slipped by 1.59 per cent to N12.35.
Business Post reports that the market breadth index was positive during the session after recording 37 appreciating equities and 14 depreciating equities, implying strong investor sentiment.
Abbey Mortgage Bank led the activity chart with a turnover of 164.1 million units worth N1.5 billion, Ellah Lakes sold 76.7 million units for N767.2 million, Access Holdings transacted 44.8 million units valued at N1.1 billion, Linkage Assurance exchanged 23.0 million units worth N41.2 million, and The Initiates traded 20.2 million units for N562.1 million.
At the close of trades, market participants transacted 608.5 million units worth N32.0 billion in 53,826 deals versus the 588.5 million units valued at N27.9 billion executed in 57,352 deals in the previous session. This showed that the number of deals eased by 6.15 per cent, the volume of transactions rose by 3.40 per cent, and the value of transactions soared by 14.70 per cent.
By Adedapo Adesanya
The Naira further depreciated against the United States Dollar by N3.46 or 0.25 per cent to N1,362.21/$1 from N1,358.75/$1 in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, June 5.
However, it appreciated against the Pound Sterling in the same market window during the session by N4.47 to trade at N1,823.59/£1 compared with the previous day’s N1,828.06/£1, and gained N7.00 against the Euro to sell at N1,574.58/€1, in contrast to Thursday’s closing price of N1,581.58/€1.
For another trading session, the Nigerian Naira maintained stability against the Dollar in the parallel market and the GTBank forex counter on Friday at N1,375/$1 and N1,372/$1, respectively.
The Naira is expected to remain strong in the near term, backed by a rise in external reserves, which are nearing $50 billion, enhancing analysts’ confidence about its outlook in the second half of 2026.
Heightened global uncertainty has reduced the incentive for importers and corporates to demand FX, as cautious trade weighs on import needs. Analysts estimate a $40 billion net FX position for the year, a projection anchored in oil windfall gains.
As for the cryptocurrency market, prices remained depressed following a strong US jobs report that spurred markets to price in higher-for-longer interest rates, sending Treasury yields and the dollar up while hammering stocks, especially AI-related names. Crypto markets saw heavy leverage washouts with about $1.6 billion in positions liquidated over 24 hours.
Ethereum (ETH) gave up 4.9 per cent to trade at $1,584.68, Solana (SOL) fell by 3.3 per cent to $63.22, Bitcoin (BTC) crashed by 1.9 per cent to $61,333.23, Dogecoin (DOGE) slipped by 1.8 per cent to $0.0821, and Ripple (XRP) moderated by 1.8 per cent to $1.09.
Further, TRON (TRX) dropped 1.6 per cent to sell at $0.3197, Binance Coin (BNB) slumped by 1.0 per cent to $581.18, and Cardano (ADA) declined by 0.4 per cent to $0.1589, while the US Dollar Tether (USDT) gained 0.07 to sell at $0.9997, and US Dollar Coin (USDC) closed flat at $0.9998.
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