BACKGROUND
The Securities and Exchange Commission (SEC) is the main regulatory institution of the Nigerian capital market. It is supervised by the Federal Ministry of Finance. The origin of the Securities and Exchange Commission dates back to 1962, when an ad hoc consultative and advisory body, known as the Capital Issues Committee, was established under the aegis of the Central Bank of Nigeria (CBN).
SEC’s activities are governed by the Investments and Securities Act 29 of 2007. Its mandate includes to examine applications from companies seeking to raise capital from the capital market and recommend the timing of such issues to prevent issues of clustering which could overstretch the market’s capacity.
The Nigerian Stock Exchange (NSE) is privately owned and self-regulating, but the SEC maintains surveillance over it with the mandate of ensuring orderly and equitable dealings in securities, and protecting the market against insider trading abuses.
The Nigerian Stock Exchange (NSE) was founded in 1960 and today services the largest economy in Africa. A registered company limited by guarantee, it is licensed under the Investments and Securities Act (ISA) and is regulated by the Securities and Exchange Commission (SEC) of Nigeria.
The NSE is a founding member and executive committee member of the African Securities Exchanges Association (ASEA), a full member of the World Federation of Exchanges (WFE) and an affiliate member of the International Organization of Securities Commissions (IOSCO). It is also a foundation member of the World Economic Forum (WEF).
THE SYNERGY
As a regulator, SEC has not only ensured and scrutinized listing process, but also ensured strict compliance with post listing requirements.
SEC has also embarked on multifaceted reforms which have upped the Nigerian capital markets’ performance on all critical indicators in the past three years in unprecedented fashion. The reforms have institutionalized a culture of zero tolerance for market infractions and indiscipline through a strong regime of market enforcement; market technology improvement through digitization and ICT deployment; enhanced market depth and breadth through product diversification and improvement; improved human capital through training and retraining; achieved a consensual approach to conceptualizing market development strategy through consistent and extensive regulator / operator and other stakeholder engagement.
The commission has been known for maintaining its eagle eye on the Nigerian Capital Market by ensuring that NSE activities are truly transparent, equitable and in line with laid down principles in the interest of the investing public.
One of such is the investigation into NSE’s activities when it received allegations which suggested that the affairs of the NSE may have been managed in a manner that is detrimental to the interest of investors. These allegations derived principally from two sources that include:
(i) The issues raised by a team of SEC Inspectors in a report to SEC following the annual investigation of’ the NSE carried out between 14 to 18 September 2009; and
(ii) Allegations against the NSE received from industry stakeholders in general and notably the former President of the Council.
Another was a recent investigation on the technical suspension imposed on the shares of Access Bank by NSE. Technical suspension refers to a formal NSE operational practice, where share prices of quoted companies involved in capital raising are frozen from gaining or losing during daily equity transactions.
THE SUCCESS STORY
The result is there for investors and observers to see. The last few years have witnessed the emergence of Nigeria’s capital market as a major investment destination for investors searching for yield and value across the world. In 2012, strong demand saw Nigeria’s stock market rise 45 percent, making it the third best performer on the African continent.
The market-making programme, which commenced with securities lending and short selling, is believed to have brought fillip to the market. The economy has shown promise despite the many challenges, and its opportunities that have attracted many foreign investors to the market. They now constitute over 70 percent of investors in the market. The clean-up in the banking industry has also spurred investors, especially, following the good results they have also published confirming that they are now truly healthy.
The work of SEC as a regulator in pushing through reforms has also helped in bringing confidence back to the market. The current surge can be attributed to the forbearance for stockbrokers which has finally removed the debt overhang that weighed on the market especially in the last three years.
Going from the featt of 2012, SEC and the NSE have been building on the foundation of 2012 as the yearly dividends have continued to increase. The dividend yield for the 52-week period ending December 31, 2013 was 4.91%, while the dividend yield for the 52-week period ending Sep 30, 2014 was 5.23%.
Recently, Nigerian Stock Exchange (NSE) led by its Chief Executive Officer Oscar Onyema, signed a capital market agreement with London Stock Exchange Group (LSEG). The objective of the agreement according to the NSE is to strengthen cooperation and promote mutual development between the two exchanges. The agreement which supports African companies seeking dual listings in London and Lagos would be for an initial period of two years.
RECOGNITION
While the NSE has been receiving accolades for its growth and ability to secure the confidence of investors, SEC has also received commendations for its effort. The commission won the 2013 edition of the prestigious Africa Index Series Award for the category of the continent’s “Most innovative Capital Markets Regulator”. The SEC Nigeria also won the award last year, 2012.
Winning the award back – to – back for the second year running attests to the high regard in which the recent course of the Nigerian capital markets is held in the international market. It speaks to the significant traction which the three – year long reforms being implemented by the leadership of the SEC, finds among foreign investors and observers alike.
Also, Director General, Securities and Exchange Commission (SEC), ArunmaOteh was recently re-elected Chair person of the African/Middle East Regional Committee (AMERC). She was unanimously returned un-opposed as chairperson of (AMERC)’at 39th annual conference of the International Organization of Securities Commissions (IOSCO) in Rio de Janeiro.
PROMISE
Volatility and change are indigenous to the capital market. SEC has therefore assured investors of continuous stability and sustenance of investor confidence and the integrity of the Nigerian capital market. “We shall continue to initiate, anticipate and embrace change. Contingency planning, forecasting and our self-initiator culture will guide our response to spontaneous developments,” the commission stated.
On its part, NSE promises to promote increased capital formation in Nigeria by providing issuers and investors with a responsive, fair and efficient stock market through competent and dedicated professionals, using the latest technology, thus assuring local and foreign investors access to the Nigerian stock market with confidence both in the regulatory framework and in the reliability of trading and settlement systems.
