Securities and Exchange Commission (SEC) last week released six new rules to the capital market. One of these rules – “rule on trading in unlisted securities”- seeks to ensure that all securities of unlisted public companies are traded within securities exchanges that are registered with the Commission.
The rule on trading in unlisted securities provides that “all securities of unlisted public companies shall be bought, sold or transferred only by means of a system approved by the Commission and under such terms and conditions as the Commission may prescribe from time to time.”
Also, it provides that “no person shall buy, sell or otherwise transfer securities of an unlisted public company except through the platform of a registered securities exchange established for the purpose of facilitating over-the-counter trading of securities.
“Any unlisted public company, director, company secretary, registrar, broker/dealer or such other persons who facilitate the buying, selling or transfers of the securities of an unlisted public company otherwise than through the platform of a duly registered securities exchange, shall be liable to a penalty of not less than N100,000 in the first instance and not more than N5,000 for every day of default,” the SEC further noted in the new rules.
Under Section 313(1) of the Investments and Securities Act 2007, the SEC is empowered to make rules and regulations for effective regulation of the Nigerian capital market.
Following the release of the rule on trading in unlisted securities, the NASD plc said this new rule will introduce new levels of transparency to the Over-The-Counter (OTC) market in Nigeria.
“It will enable best practice by operators: protection for investors: better price discovery for the market in general and a much deeper, more liquid, capital market. We believe a dynamic and responsive rule making process is also a vital ingredient for rapid but organised growth and we look forward to the continued development of our markets,” said the NASD plc.
In addition to the rule on trading unlisted securities, other new rules that were recently published by the SEC are: Code of Conduct for Rating Agencies; Code of Conduct for Underwriters; Code of Conduct for Trustees; Rules on Securitisation, and Rules on National Investor Protection Fund.
