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 Modupe Gbadeyanka
The federal government, the 36 states of the federation and the 774 local government areas have received N1.727 trillion from the Federal Accounts Allocation Committee (FAAC) for December 2024.
The funds were disbursed to the three tiers of government from the revenue generated by the nation in November 2024.
At the December meeting of FAAC held in Abuja, it was stated that the amount distributed comprised distributable statutory revenue of N455.354 billion, distributable Value Added Tax (VAT) revenue of N585.700 billion, Electronic Money Transfer Levy (EMTL) revenue of N15.046 billion and Exchange Difference revenue of N671.392 billion.
According to a statement signed on Friday by the Director of Press and Public Relations for FAAC, Mr Bawa Mokwa, the money generated last month was about N3.143 trillion, with N103.307 billion used for cost of collection and N1.312 trillion for transfers, interventions and refunds.
It was disclosed that gross statutory revenue of N1.827 trillion was received compared with the N1.336 trillion recorded a month earlier.
The statement said gross revenue of N628.972 billion was available from VAT versus N668.291 billion in the preceding month.
The organisation stated that last month, oil and gas royalty and CET levies recorded significant increases, while excise duty, VAT, import duty, Petroleum Profit Tax (PPT), Companies Income Tax (CIT) and EMTL decreased considerably.
As for the sharing, FAAC disclosed that from the N1.727 trillion, the central government got N581.856 billion, the states received N549.792 billion, the councils took N402.553 billion, while the benefiting states got N193.291 billion as 13 per cent derivation revenue.
From the N585.700 billion VAT earnings, the national government got N87.855 billion, the states received N292.850 billion and the local councils were given N204.995 billion.
Also, from the N455.354 billion distributable statutory revenue, the federal government was given N175.690 billion, the states got N89.113 billion, the local governments had N68.702 billion, and the benefiting states received N121.849 billion as 13 per cent derivation revenue.
In addition, from the N15.046 billion EMTL revenue, FAAC shared N2.257 billion to the federal government, disbursed N7.523 billion to the states and transferred N5.266 billion to the local councils.
Further, from the N671.392 billion Exchange Difference earnings, it gave central government N316.054 billion, the states N160.306 billion, the local government areas N123.590 billion, and the oil-producing states N71.442 billion as 13 per cent derivation revenue.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.65 per cent gain on Friday, December 13, boosted by three equities admitted on the trading platform.
On the last trading session of the week, Okitipupa Plc appreciated by N2.70 to settle at N29.74 per share versus Thursday’s closing price of N27.04 per share, FrieslandCampina Wamco Nigeria Plc added N2.49 to end the session at N42.85 per unit compared with the previous day’s N40.36 per unit, and Afriland Properties Plc gained 50 Kobo to close at N16.30 per share, in contrast to the preceding session’s N15.80 per share.
Consequently, the market capitalisation added N6.89 billion to settle at N1.062 trillion compared with the preceding day’s N1.055 trillion and the NASD Unlisted Security Index (NSI) gained 19.66 points to wrap the session at 3,032.16 points compared with 3,012.50 points recorded in the previous session.
Yesterday, the volume of securities traded by investors increased by 171.6 per cent to 1.2 million units from the 447,905 units recorded a day earlier, but the value of shares traded by the market participants declined by 19.3 per cent to N2.4 million from the N3.02 million achieved a day earlier, and the number of deals went down by 14.3 per cent to 18 deals from 21 deals.
At the close of business, Geo-Fluids Plc was the most active stock by volume on a year-to-date basis with a turnover of 1.7 billion units worth N3.9 billion, followed by Okitipupa Plc with the sale of 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.3 million units sold for N5.3 million.
In the same vein, Aradel Holdings Plc remained the most active stock by value on a year-to-date basis with the sale of 108.7 million units for N89.2 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with a turnover of 297.3 million units worth N5.3 billion.
By Adedapo Adesanya
The Naira appreciated further against the United States Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by N1.50 or 0.09 per cent to close at N1,533.00/$1 on Friday, December 13 versus the N1,534.50/$1 it was transacted on Thursday.
The local currency has continued to benefit from the Electronic Foreign Exchange Matching System (EFEMS) introduced by the Central Bank of Nigeria (CBN) this month.
The implementation of the forex system comes with diverse implications for all segments of the financial markets that deal with FX, including the rebound in the value of the Naira across markets.
The system instantly reflects data on all FX transactions conducted in the interbank market and approved by the CBN.
Market analysts say the publication of real-time prices and buy-sell orders data from this system has lent support to the Naira in the official market and tackled speculation.
In the official market yesterday, the domestic currency improved its value against the Pound Sterling by N12.58 to wrap the session at N1,942.19/£1 compared with the previous day’s N1,954.77/£1 and against the Euro, it gained N2.44 to close at N1,612.85/€1 versus Thursday’s closing price of N1,610.41/€1.
At the black market, the Nigerian Naira appreciated against the greenback on Friday by N30 to sell for N1,650/$1 compared with the preceding session’s value of N1,680/$1.
Meanwhile, the cryptocurrency market was largely positive as investors banked on recent signals, including fresh support from US President-elect, Mr Donald Trump, as well as interest rate cuts by the European Central Bank (ECB).
Ripple (XRP) added 7.3 per cent to sell at $2.49, Binance Coin (BNB) rose by 3.5 per cent to $728.28, Cardano (ADA) expanded by 2.4 per cent to trade at $1.11, Litecoin (LTC) increased by 2.3 per cent to $122.56, Bitcoin (BTC) gained 1.9 per cent to settle at $101,766.17, Dogecoin (DOGE) jumped by 1.2 per cent to $0.4064, Solana (SOL) soared by 0.7 per cent to $226.15 and Ethereum (ETH) advanced by 0.6 per cent to $3,925.35, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
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