Last week, the Securities and Exchange Commission (SEC) held its capital market committee meeting for the second quarter. Mary Uduk, the Acting Director General engaged the press to brief them of the resolutions made at the meeting. Our correspondence Ade Olulana brings excerpts of the media briefing:
What were some of the issues discussed at the CMC?
The market was informed of the success recorded at the Lagos State Probate Registry and it was intimated of the need to extend it to Probate Registries across the Country.
Recall that the Commission had earlier required CMOs to register with their relevant trade groups, to ensure compliance to these directives, SEC also requires proof of registration with these trade groups as a perquisite for operators to carry out transactions or make any submission at the Commission.
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The Commission noted the challenges posed to the market over the uncertainty around the collection of stamp duties between FIRS and NIPOST, we informed the market operators of the SEC and Capital Market Master Plan Implementation Council, CAMMIC engagements with the office of the Vice President and the Federal Ministry of Finance to resolve this issue. We expect this to be resolved very soon as well as our request to exempt equities transactions from VAT payments.
The Commodities Trading Ecosystem Committee informed the meeting of the round roundtable on the Commodities Ecosystem with key stakeholders slated for 3rd October, 2019.The Committee also reported the commencement of a quarterly bulletin by the Commission focusing on issues on the Commodities Market. It further raised the collaboration of SEC and other relevant stakeholders to develop the certification frame work for collateral managers.
Secondly, The Financial Literacy Technical Committee reported on the success of the collaboration between the Capital Market Committee and the Education Research Development Council (NERDC). Two weeks ago, a workshop was organized to infuse the earlier stand lone contentment into the curriculum of primary and Secondary Schools. The Committee also developed enlightenment video and publication to be disseminated via social media. Other market operators were also urged to develop same.
On Non – Interest Finance Committee, we learnt of the on the ongoing conversation with the African Development Bank to issue Sukuk under an existing issuance programme. The Market was also informed of the existence of an Islamic Finance Forum portal where operators could visit to obtain necessary information on financial products. The Committee is also in discussion with the Debt Management office on the possibility of issuing short term Sharia compliant paper as part of the periodic Nigerian Treasury bill issuances.
Was there any update from the multiple subscription committee?
The Multiple Subscription Committee informed the meeting that the Committee of heads of banking operations had agree to collaborate with the Commission to display banners in banking hall all over the country sensitizing the public on the regularization of multiple subscription of shares. Company secretaries of listed Companies also agree to display similar information on their website and offices. So far, the regularization exercise recoded the consolidation of 3.4 million units of shares.
Any other report?
The Identity Management Committee gave an update of its meeting with National Information Technology Development Agency (NITDA) on the implications of the Nigerian Data Protection Regulation on Capital Market Operations, the Committee also stated its plan to develop a standardize data form which seeks to consolidate registration and access to processes in the Capital Market by investors.
After extensive discussions, what were some of the resolutions taken at the meeting?
Some of the resolutions are, SEC to invite DITDA to the next CMC meeting to make presentation on the impact of the Nigerian Data Protection Regulation the Capital Market, The Commission to engage CBN to include eDMMS charge in guideline for bank charges, Trade groups report to the Commission on the level of compliance their respective members as to the directives that all CMOs MUST register with their respective trade groups.
Also, it was agreed that Brokers and registrars are to make available to the Committee on Multiple Subscription Committee on a periodic basis number of regularized account and the SEC to engage relevant stakeholders on e-Dividend and multiple subscription account concerning the following: Ensuring that complete data are transferred amongst operators such as brokers, registrars and CSCS, Discouraging unclaimed dividend from building up from securities of listed companies and developing the modalities for validating register of members where the registrars are furnished with incomplete information such as missing account numbers.
Where are we now on Fintech?
You will also recall that the Commission had in November, 2018 constituted a Committee to develop a FinTech road map for the capital market committee, I am delighted to inform you that the road map was presented to the Capital Market Committee at this CMC. The report highlighted the current application of FinTech in the market, opportunities, challenges and recommendations.
The report will be made available on the Commission’s website for input, comments and given the importance of the recommendations of the FinTech road map Committee and the need for timely implementations, the Commission will be setting up a FinTech road map working group to drive the implementation. This new Committee will be headed by Mr. Ade Bajomo.
We also used the platform of the meeting to reiterate our support for FinTech in the Capital Market. The Committee was briefed of the effort to engage and guide FinTech startups that seeks to operate in the Nigerian Capital Market. Capital Market operators were therefore urged to embrace FinTech not as a competitor but as enablers to their existing operations and processes.
To be more specific, what SEC is doing in regulating the existing fintech companies?
The SEC has been engaging the FinTech community, we set up a FinTech committee to come up with a road map for the Nigerian capital market in general, that report and the road map was presented yesterday at the CMC meeting, secondly in the Commission there is a FinTech division that engages with the FinTech community, we also have a form on our website to invite “would be” FinTech organizations that want to operate in the capital market to complete those forms to enable us understand the area that they are interested in and about 42 or more completed the form and we have been engaging them.
Some of them are ripe to be registered and admitted as full capital market operators.
We also are building capacity as a Commission to understand FinTech. FinTech has come to stay, we are embracing FinTech even in IOSCO FinTech is discussed.
We know FinTech companies are delving into investments, offering investments solutions, which boast of over 20m milliners signing over their portals, what is SEC doing to regulating or supporting these companies and making this data available to us.
Again, you talked on SEC collaborating with CBN on e-DMMS bank charges can you please elaborate on that?
The CBN has a published charges for the banks, whatever kind of transaction that you do in the banking system there is already an established bank charges but the e-dividend charges are not part of the CBN charges and because of that investors are having issues with banks where banks charge them and since they are not listed as bank charges investors complain, so SEC is engaging CBN so that such charges can be listed.
Recall that the charges came up when SEC stopped the free dividend mandate.
Any update on the Capital Market studies curriculum in partnership with NERDC?
The curriculum has been developed for the introduction of capital market studies in primary and secondary schools, there is need to infuse it in certain number of subjects. The workshop that took place was the next phase to now infuse the curriculum in mathematics, accounting, business studies and other subjects. The next option is development of the teacher’s guide, the SEC is driving the process, and before the end of the year, the capital market studies will become active.
Now that we have chairman of the SEC board, how soon do we expect SEC account?
In the last four years, the account of the SEC was not signed because there was no board, as we speak, the accounts have all been signed and would be on the website before the end of next weeks and copies sent to relevant authorities.
We have been talking about the Commodity Ecosystem are you using securities regulation to regulate the sector?
They are regulated like any other exchange. They have rules, and their regulations are called general rules of application and exchanges. And in the same way that the Nigerian stock exchange, FMDQ are regulated and there are specialized rules that are applicable to them.
The Commodities exchange is peculiar and because it deals with commodities particularly spot market, there is the futures market. In Nigeria today we have not developed the futures market for the commodities exchange. We rather work on the spot market. The futures market is an advanced form of the spot market. Therefore, there are rules that specifically target a commodities exchange.
How is SEC prepared to handle Bond applications by states? Are there any applications now?
I am not aware that there is any application from any state? If there is an invasion, we would be very happy, it will be good because the state would clean up their accounts, it will be good for transparency. Any time they want to come, we are expecting them.
However, if they must come, we have rules and they must comply with our rules and one fundamental thing we look at is the total debt of the state including the proposed loan they want to take and compare it with their revenue and we have a limit to ensure that they don’t over borrow.
Recently FMDQ secured approval to become full flesh exchange. I would like to know the thinking of SEC in approving that request and what it portends for us as country?
Competition is good for any environment. FMDQ as a full exchange is the second full exchange in the market, it will help strengthen the market, it will give people choice, if you cannot do it here you can do it there. We also expect other exchanges to come up. It brings down cost and improve efficiency.
There is a concern about the move to have capital market studies in the educational sector. Is SEC trying to work on regulations that would allow children or minor to invest in the market?
The Capital Market is a specialized market and SEC introducing children to the market is for them to learn the basic terms and be familiar to the terms. Parents usually buy shares in the name of their children and later transfer to them when they become adults.
Since minors cannot enter a contract until they turn 18 years, so the essence is to catch them young, know the risks and returns before they can invest on their own.
Any developments on cross boarder regulations?
Every region has it rules on cross boarder listing and all the rules were harmonized. This is done to enable issuers or CMOs to raise funds.
What is the current figure on unclaimed dividends?
As at the report received at CMC meeting over 2.7 million accounts have been mandated and over 3.4 billion units of shares were regularized and by the next meeting the department concern would have reconcile this figures and give the current update of the latest figure on unclaimed dividend will be determined.
Any updates on Linking of exchanges in Africa?
This a project by African Development Bank and African Stock Exchange Association, it was set up in February 2019 and the idea is to allow for cross boarder trading and settlements of securities transaction. Is to provide a market within the African sub – region where people come from different countries to trade on the plat form.
It has commenced already in West African and Ghana and Nigeria have commenced trading.
Any further developments?
We are organizing a 2 day conference on leveraging the Capital Market for economic growth and development
slated for September 11 & 12, 2019 at the University of Lagos. The event seeks to stimulate exchange of ideas between the academia and the industry.
In a related development, the inaugural West African Capital Market Conference themed: “positioning west African Capital Market to achieve sustainable and real economic growth through integration” will hold in October 27 & 29, 2019 in Abidjan, Ivory Coast.
The conference will focus on infrastructure financing and proffer solution towards the development and integration of the region’s Capital Market. It is jointly organized by the Financial Sector Deepen Africa, West African Securities Monitoring Authority, Economic Community of West African States (ECOWAS). This conference is expected to become a major bi-annual event for the Capital Market Community in the region.
We believe the Capital Market of our dreams can only be achieved through collaboration of all stakeholders. The role of the media in decimating information and enlightening the public on initiatives currently been implemented in the Market is critical, we therefore crave your indulgence to continue supporting us through your various platforms.