The National Assembly has granted the Securities and Exchange Commission (SEC) full regulatory authority to register and oversee online forex trading platforms, activities, and intermediaries.
These new powers were outlined in the Committee on Capital Market Report, which accompanies a bill to repeal the Investments and Securities Act of 2007. The bill, originating from the Senate, passed its third reading in the House of Representatives last week.
It aims to enact a new Investments and Securities Bill and to establish the SEC as the leading regulatory body for Nigeria’s capital market. This includes overseeing the market’s development, protecting investors, ensuring fairness, transparency, and efficiency, and minimizing systemic risks, among other objectives.
The amendments to the bill, particularly clause three (o), specifically empower the SEC to regulate and register online forex trading activities, platforms, and intermediaries. Clause three(four)(c) further enables 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In addition to the functions and powers outlined in the repealed Act of Parliament, the newly passed bill further strengthens the Commission’s role. It grants the SEC the authority to “prepare guidelines, organize training programs, and disseminate information essential for the establishment of securities exchanges and other market venues.”
The bill also empowers the Commission to appoint or procure the appointment of qualified professionals, experts, or individuals necessary to fulfill any of its objectives, functions, and powers as stipulated in the new legislation.
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, the re-enacted bill introduces new provisions for penalties, as stipulated by Parliament. 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.”
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.”
