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SEC plans new rules to make market more attractive

By on March 19, 2015

The Board of the Securities and Exchange Commission (SEC) has given the go-ahead to the management of the commission to come out with new rules that will make the market more efficient and attractive to investors and issuers.

THISDAY checks revealed that the approval was given during the board meeting last Thursday in Abuja.  Although details  of the rules remained sketchy as at press time on Monday, sources close to the commission confirmed the development, staying that  the rules are all encompassing and would be issued in phases.

“Determined to ensure that the market is  well regulated in line with international best practice and market dynamics, the commission,  from time to time, looks at its  rule and guidelines, amend some and introduce the new ones.  In this regard, the Board of the commission approved some rules that will soon be unveiled after the necessary rules making process. They are meant to make the market to be more efficient and attractive. The process of bringing the rules out is on,” the source said.

The management of SEC had since February renewed its effort in the area of giving the market proper direction by releasing guidelines which operators had waited for very long.

For instance, the commission last month released rules and regulations on demutualisation   three years after, a committee set up  submitted its report. Before then, the rules on Complaint Management Framework, which had been with the commission for over three years were also released.

Under the proposed draft regulations for demutualisation of securities exchanges in Nigeria, SEC said, “no single entity/person or related entities/persons should be permitted to own, directly or indirectly more than five per cent of the equity and/or voting rights in the demutualised securities exchange.”

The commission said that the aggregate equity interests of members of any specific stakeholder group (for example, brokers and broker/dealers) in the demutualised securities exchange should not exceed 40 per cent.

SEC added that the trading participants who are shareholders of the securities exchange shall with effect from the date of demutualisation reduce their cumulative shareholdings in the demutualised securities exchange to not more than 10 per cent within five years.

The regulations make room for a strategic investor, on the conditions including: that  it should provide evidence of technical expertise through previous experience in managing other exchanges, the aggregate number of shares to be offered to the strategic investors shall not be more than 30 per cent of issued and fully paid up capital of the securities exchange. “However, if the Exchange is in dire need of funds, it could issue a higher number of shares subject to approval of the commission,” SEC added.

Also, the regulations require that the process of demutualisation of the securities exchange should include an exchange of membership rights in the securities exchange for ownership of shares in the demutualised securities exchange.

According to SEC, prior to the commencement of demutualisation, the securities exchange should initiate a process for determining the accurate list of members of the exchange.

 

[ThisDay]