NASD Advocates Compliance with SEC Rules on Securities Trading
The NASD Over-the-Counter (OTC) Exchange has urged public limited companies to adhere to the Securities and Exchange Commission (SEC) rules that mandate public unlisted companies to trade their securities on SEC-registered OTC Exchanges.
NASD advocated this in a statement on Friday in Lagos. The OTC Exchange explained that many unlisted public companies currently do not trade their securities on SEC-registered OTC platforms.
It said that this prevents SEC from monitoring the activities of these companies as part of its investor protection mechanism.
According to NASD, by the rule, purchase, sale and transfer of unlisted securities are prohibited for dealing between bilateral parties outside a registered stock exchange to ensure transparency.
It said such transactions should be done on a SEC-registered OTC Exchange because the securities of public companies are, by regulation, supposed to be registered with SEC immediately they are created.
“The commission reserves the right to sanction erring companies in line with the provision of the Investment and Securities Act (ISA).
“The rule specifically states that: all securities of unlisted public companies shall be bought, sold or transferred only by means of a system approved by the commission.nder such terms and conditions as the commission may prescribe from time to time.
“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,” it said.
NASD noted that if the rule was enforced by SEC, it would make the securities of unlisted public companies more accessible to investors and other interested market participants on a trusted platform.
The OTC Exchange added that this would enhance liquidity of shares for the issuers. It explained that transactions on such securities would no longer be among investors that had contact with the company’s management.
NASD said that it would also minimise underhand dealing in securities, curb fraudulent transactions, and boost investor confidence in the capital market. The OTC Exchange further said that the SEC-registered OTC Exchange platform provides an opportunity for price discovery through the interplay of market forces.
It stated that the rule also enhances portfolio diversification with ease, as equity investors could easily access securities from different sectors of the economy. NASD Plc hosts an OTC Exchange that provides quick and secured platforms for primary and secondary market liquidity.
NASD is an alternative trading and listing Exchange that provides convenient access to growth companies, seeking primary engagement with structured market infrastructure platforms. Ghana to Import Petroleum from Dangote Refinery – Official
