The Investments and Securities Bill has been described as capable of transforming the capital market, encourage the influx of foreign investors as well as boost investors’ confidence among others.
Chairman of the House Committee on Capital Markets and Institutions, Hon. Babangida Ibrahim stated this during an interview weekend while commenting on the recent passage of the Bill by the House of Representatives.
Ibrahim said the ISA Bill seeks to repeal the existing Investments and Securities Act 2007 and to establish a new market infrastructure and wide ranging system of regulation of investments and securities businesses in Nigeria especially in the areas of derivatives, systematic risk management, financial market infrastructure and Ponzi scheme and platforms.
Other areas the bill addresses are alternative trading systems, inclusion of National Pensions Commission as part of the board of the Securities and Exchange Commission, deletion of the provisions on merger control in the current Act and amendment of the criteria of borrowing by sub nationals and strengthening and enforcement powers of the Securities and Exchange Commission in line with the requirement of the International Organisation of Securities Commissions, IOSCO.
According to him, “We owe a duty to Nigerians and Nigeria to make sure that things work well. In the financial market we have the money market and the capital market. With the challenges facing the money market, the only option left is the capital market. What we tried to do is to build investors’ confidence and ensure that investors are comfortable. At the same time, we realised that there are areas like derivatives, commodities exchanges, Ponzi schemes and the rest of them that are new developments in the capital market. We feel it’s very important for us to provide regulations for these new developments.
“We also emphasized borrowing by sub nationals, in the past you hardly see state governments and local governments coming into the capital market to borrow. We introduced a lot of new provisions and also made provisions relating to financial market infrastructures. Also the board of the SEC was expanded to include the Pension Commission. The existing Act needed a total overhaul because of passage of time and developments in the capital market.
Ibrahim said the Bill is also to determine the type of trainings required of an operator to perform professional functions in the capital market and also provide certification for persons deemed to have met the qualifications standards.
“The Act will achieve transformation of the market, from manual to automation, from manual to multiple securities exchanges, influx of foreign professionals into the country and also need to harmonise standards. The bill will also achieve expansion of products range in the market, equities, bonds, sukuk, derivatives and an advent of electronic share issuance.
Hon. Ibrahim stated that the House of Representatives and indeed the Committee on capital market are committed to ensuring that the Securities and Exchange Commission delivers on its core mandate of due registration of the players in the capital market, market integrity to avoid systemic risk, guarantee inspection, investigation of breaches, due surveillance, market development and law enforcement and rules making.
“This Committee is indeed proud of this bill as they seek to ensure a more robust, vibrant, prosperous and more developed capital market and also to ensure that the capital market is well institutionalised and accountable.
“We hope the resources of Nigerians in the capital market will remain safe, accountable and prosperous. The capital market is a veritable tool for wealth creation and we will ensure this is true for Nigerians. If there was any time we need to rally for the economic good of Nigeria it is now and this is the time”.
On the issue of Ponzi schemes, Ibrahim said the House has ensured that there is enough deterrent in the bill. This he said includes cash penalty, conviction as well as a combination of both cash penalty and conviction adding, “It depends on the nature and gravity of the offense but we try as much as possible that its serves as a deterrence to anyone that wants to do any manipulation in the capital market. We have provided enough regulation in this bill that will take care of many of these issues.
“I want to see a vibrant capital market that is efficient and one that can boost investors’ confidence and where the processes are simple. One of the major challenges and complaints by investors is the issue of dividend claims.
“This act will ensure the streamlining of data base of investors and also look at the aspect of registrars. This Act has looked at the various issues and ensures it aligns with the global trend. We want a capital market that anyone can come in freely, invest and get the benefit of his investments. We have to put our hands on deck to ensure that the capital market functions efficiently, we need to ensure we boost investors’ confidence and ensure that we are as transparent as possible” He added.
Also commenting on the passage of the Bill by the house, Executive Commissioner Legal and Enforcement of the SEC, Mr. Reginald Karawusa, commended the National Assembly on its efforts at ensuring a vibrant capital market that would aid economic development.
Karawusa stated that the Bill introduced the appropriate framework for regulation of Commodities Exchanges and trading of Warehouse Receipts to strengthen the commodities market ecosystem with a view to diversifying the Nigerian economy away from a mono-product economy.