The Securities and Exchange Commission (SEC) has been forced to rely exclusively revenues from market operations to finance its activities following the refusal of the Senate to give it any allocation in the 2013 budget unless the Director-General, Ms Arunma Oteh was removed.
This lack of funding has caused the SEC to become more creative financially in raising its revenues, which typically come from daily statutory charges for purchase and sale of shares on the Nigerian Stock Exchange (NSE), for which 0.3 per cent of consideration goes to the SEC, fees from broker-dealers, underwriters, issuing houses, registrars, fund/portfolio managers, individual/ corporate investment advisers, commodities brokers, sponsored individuals, bankers to an issue, trustees, rating agencies, capital market consultants, venture capital companies / fund managers, market makers, custodians of securities, depository agencies, jobbers, as well as from market facilities; and lastly, the sale of application forms to intending market operators; as well as penalties paid by operators.
The commission has strengthened its oversight of capital market activities as it has been able to pay salaries for three months running despite having no monies allocated to it in the budget.
The House of Representatives recently insisted that President Goodluck Jonathan should implement the resolution of the House by removing the director-general of SEC, leading many market operators and analysts are already querying this rigid position of the House, who are of the opinion that any attempt to relieve her of her duties would negatively affect the recent rebound in Nigeria’s capital market, which is driven by investors perception on improved regulation.
“The National Assembly’s action would affect programmes aimed at developing the capital market, not that SEC as a regulator cannot on its own pay its staff salaries from market related revenue. Just like the Nigerian Stock Exchange and Abuja Securities and Commodities Exchange (ASCE) that are self-regulatory organizations (SROs) who don’t get budgetary allocations”, a stockbroker who spoke on the condition of anonymity.
“The National Assembly may think that withholding SEC’s budget is a way of dealing with Oteh, not knowing that they are not. Rather, they are not helping the growth of the capital market, as programmes around market development would be affected.
“If there are people that should complain against the regulator, it should be operators. But we cannot complain because the regulator has done a lot of work to instill discipline in our market, which is now driving the rebound being witnessed across market segments,” he added.
Oteh recently chaired the Africa and Middle East Regional Conference (AMERC) of the International Organisation of Securities Commissions (IOSCO), and her role in reforming Nigeria’s capital market has continued to yield results in the international arena, the most recent being the signing of a Memorandum of Understanding (MoU) with the Capital Market Authority (CMA) of Oman.
The MoU specifies the framework for bilateral co – operation and interface between the SEC Nigeria and the CMA of Oman, in matters relating to securities market development, oversight and regulation. It formalises and raises the profile of co-operation for the effective development and operation of the capital markets of both countries.
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