THE National Assembly has granted unfettered regulatory powers to Securities and Exchange Commission (SEC) to register and regulate online forex trading activities, platforms and intermediaries.
The new powers conferred on the commission were contained in Report of the Committee on Capital Market on a bill for an Act to repeal the Investments and Securities Act, 2007, exclusively obtained by Nigerian Tribune.
The bill which originated from the Senate also passed through third reading on the floor of the House of Representatives last week, further seeks to enact the Investments and Securities bill and to establish Securities and Exchange Commission as the apex regulatory authority for the Nigerian capital market as well as regulation of the market to ensure capital market formation, the protection of Investors, maintain fair, efficient and transparent market and reduction of systemic risk and other related matters.
Through the new amendments, clause three (three)(o) of the bill empowers the apex regulatory authority to register and regulate online forex trading activities, platforms and intermediaries.
Clause three(four)(c) further empowers the commission to: “place directors of public companies on probation for a period of time considered reasonable by the commission in accordance with regulations made pursuant to this Bill.”
In addition to previous functions/powers stipulated in the repealed Act of Parliament, the newly passed bill further empowered the Commission to “prepare guidelines, organise training programmes and disseminate information necessary for the establishment of securities exchanges and other market venues; appoint or procure the appointment of all such qualified persons, professionals or experts to give effect to or for performance of any of its objectives, functions and powers in this Bill.”
The lawmakers also retained the provision of Section 21 of the amended Act which empowered the Commission to: “charge, retain and utilise for its purposes: (a) penalties imposed for violation of this Bill and the rules and regulations made under it; and
(b) fees collected for the services rendered by the Commission under this Bill, including recovery of costs of administrative proceeding.”
However, as stipulated in the new provisions of the re-enacted bill, the Parliament made new provisions for penalties.
Clause 26(2) stipulates that: Where any person contravenes subsection (1) of this section: each of the directors, promoters or any person who can reasonably be regarded as being in control of the company shall be deemed to have committed an offence and is liable on conviction to a term of imprisonment of not less than five years or a fine of N10,000,000 or both.”
In the new provisions in Clause 35(2) provided that: “A securities exchange that fails or refuses to comply with or respond to a directive given under subsection (one) shall be liable to a penalty of not less than N10,000,000 and a further penalty of not less than N500,000 for every day the non-compliance continues.”
As part of the newly introduced punitive measures in the bill as contained in Clause 37(d) empowered the Commission to revoke the certificate of a Securities Exchange that: “engages in other businesses for which it is not registered in accordance with the provisions of this Bill; (e) and fails to comply with the terms and conditions of the registration granted by the Commission.”
On the establishment and operation of a financial market infrastructure, Clause 41(1) of the bill states that: “A person shall not establish or operate a financial market infrastructure as defined in this Bill unless it has obtained a certificate of registration from the Commission in accordance with the provisions of this Bill and the rules and regulations made pursuant to it.
“2) Where any person contravenes subsection (one), the Commission shall shut down its operations and seal up its premises immediately or within such time frame as the commission may determine and each of the directors, promoters or any person who can be regarded as being in control of the company shall be deemed to have committed an offence and is liable on conviction to a fine of not less than the prescribed paid-up share capital of the relevant financial market infrastructure function as specified by the Commission or to imprisonment for a term of not less than five years or both.
“(3) The Commission may in lieu of prosecution under subsection (2), impose a penalty of not less than the prescribed paid-up share capital of the relevant financial market infrastructure function as specified by the Commission.”
Clause 95(1) also says, “A person shall not make any invitation to the public to acquire or dispose of any securities or to deposit money with anybody corporate for a fixed period or payable at call, whether bearing or not bearing interest unless the person or body corporate concerned is:
(d) collective investment scheme;
(e) government body or an agency of a government body, supranational body or such other entity approved by the Commission to issue securities under this Bill;
(f) a free trade zone entity whose capital-raising exercise has been approved by the Commission.”
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