The National Assembly has conferred extensive regulatory powers on the Securities and Exchange Commission (SEC), granting it authority to register and oversee online forex trading activities, platforms, and intermediaries.
This development is outlined in the newly passed Investments and Securities Bill, which repeals the Investments and Securities Act of 2007. The legislation, which originated in the Senate and was recently approved by the House of Representatives, aims to position SEC as the apex regulatory body for Nigeria’s capital markets. The bill’s objectives include promoting capital market development, safeguarding investor interests, ensuring market transparency, and reducing systemic risks.
Under the amendments, Clause 3(3)(o) explicitly empowers SEC to regulate online forex trading activities, while Clause 3(4)(c) authorizes the Commission to place directors of public companies on probation if deemed necessary.
Additionally, the bill equips SEC with broader powers to prepare guidelines, conduct training, and engage qualified experts to fulfill its regulatory mandate.
The legislation also allows SEC to impose penalties and utilize collected fees for its operations. Section 21 enables the Commission to retain penalties for violations and fees for services rendered under the Act. Clause 26(2) stipulates stringent penalties for non-compliance, including a minimum five-year imprisonment, a fine of N10 million, or both for directors, promoters, or persons controlling a defaulting company.
For securities exchanges, Clause 35(2) imposes a fine of N10 million for initial non-compliance with directives and an additional N500,000 per day for continued violations. Furthermore, SEC may revoke the certification of securities exchanges found engaging in unauthorized businesses or violating registration terms, as outlined in Clause 37(d) and (e).
Regarding financial market infrastructure, Clause 41(1) prohibits the establishment or operation of such entities without SEC’s approval. Violations attract immediate shutdowns, fines equivalent to the entity’s paid-up share capital, or imprisonment of at least five years. SEC may also impose penalties in lieu of prosecution.
The bill also restricts public invitations for acquiring securities or depositing money unless authorized under specific categories, including collective investment schemes, government entities, or approved free trade zone entities.
The re-enacted legislation reflects the National Assembly’s commitment to enhancing Nigeria’s capital market oversight while addressing emerging trends like online forex trading.
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