SEC Wants 2.5% of Fees Collected by NSE, FMDQ, NASD, CSCS, Others

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By Dipo Olowookere

The Securities and Exchange Commission (SEC), the apex regulatory agency in the Nigerian capital market, is proposing to take 2.5 percent of fees collected by the securities exchanges under its control so as to get more funds to carry out its statutory duties.

These securities exchanges and clearing houses include the Nigerian Stock Exchange (NSE), FMDQ Securities Exchange Plc, which does clearing and depository functions; NASD OTC Securities Exchange and Central Securities Clearing System (CSCS).

The commission, in a notice justifying this move, explained that, “In order for the commission to continue to effectively carry out its core mandate, which is increasingly becoming more expensive due to the expansion of the market in terms of size, complexity and product offerings, it is imperative that the commission charges annual fees on Exchanges and FMIs.”

It further said it “expends huge resources in the course of regulating these entities, ranging from costs of target and periodic inspections/investigations, review and approval of requests for rules making/amendments, etc,” pointing out that, “Currently, Exchanges and other FMIs do not pay renewal fees.”

Business Post reports that in order to achive its goal, SEC, in the amendment titled Proposed amendment to Schedule I (Registration Fees, Minimum Capital Requirements, Securities and others), which seeks to create a new “Part E” to provide for annual regulatory charges to be paid by Securities Exchanges and FMIs, it wants a registered securities exchange to “pay to the commission, within thirty days of end of each financial year, an amount equal to 2.5 percent of the aggregate listing fees paid to it by issuers whose securities are listed or admitted on it, during that year.”

It further proposes that, “A depository shall pay to the commission, within thirty days of end of each year an amount equal to 2.5 percent of the aggregate annual depository fees paid to it by the issuers whose securities are deposited with it.”

Also, SEC further proposes that, “A registered clearing house or central counterparty clearing house shall pay to the commission, within thirty days of end of each financial year, an amount equal to 2.5 percent of the aggregate clearing fees charged by it for clearing functions, [while] other FMIs shall be required to pay annual fees to the commission as may be determined from time to time.”

Business Post reports further that SEC is proposed an amendment to Rule 199(3), which guides removal of a company trading its shares on any of the exchanges from the different trading platforms..

The existing rule states that, “The issuer of a security listed on an exchange may file an application to withdraw the security from listing on any exchange in accordance with the rules of that exchange and notify the commission accordingly. The exchange shall within ten (10) days consider and dispose of the application and notify the commission when such application is approved.”

In the proposed amendment, SEC wants this changed to, “The issuer of a security listed on an exchange may file an application to withdraw the security from listing on any exchange in accordance with the rules of that exchange. The Issuer shall give prior notice of such an application to the commission and notify the commission accordingly. The exchange shall within ten (10) days consider and dispose of the application and notify the Commission when such application is approved.”

Explaining the reason for this change, the agency said, “Rule 199 (1) requests an exchange to notify the commission seven (7) days prior to delisting an issuer when the initiative to delist is from the exchange itself. Thus similarly when such initiative is from the issuer, it is proposed for the concerned Exchange to similarly notify the commission before delisting the issuer.”

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