SEC Reintroduces Capital Market Operators Registration Renewal

SEC Reintroduces Capital Market Operators Registration Renewal

The Securities and Exchange Commission (SEC) has re-introduced the periodic renewal of registration by Capital Market Operators (CMOs) to reduce incidences of unethical practices in the market.

A circular pasted on the commission’s website on Thursday also gave all CMOs an April 30 deadline to complete the registration renewal for 2021.

It said that the move was aimed at having a reliable data bank of all CMOs in the Nigerian Capital Market both registered and active.

The circular said the re-introduction of the registration was also to strengthen supervision and monitoring of CMOs by the commission.

”SEC hereby notifies the general public and Capital Market Operators (CMOs) in particular, of the reintroduction of the periodic renewal of registration by CMOs.

”It will provide updated information on operators in the Nigerian Capital Market for reference and other official purposes by local and foreign investors, other regulatory agencies and the general public.

”Consequently, the Commission has amended its rules and reintroduced the requirement for yearly renewal of registration by all CMOs.

”This process will be carried out electronically in order to ensure efficiency,” it said.

Early in March, 2021 SEC released guidance on the implementation of sections 60 – 63 of the Investments And Securities Act_2007

It noted the global corporate scandals that occurred in 2001 were linked to weaknesses in financial reporting and accounting practices.

In response, several jurisdictions enacted legislations to enhance transparency and uphold the integrity of financial markets.

“As part of the efforts to reform corporate financial reporting in Nigeria, the Federal Government of Nigeria passed the amended Investments and Securities Act (ISA), 2007 which provides as follows:

  • Section 60 (2) – the chief executive officer and the chief financial officer or officers or persons performing similar functions to personally certify the accuracy of the financial statements prepared by such company.
  • Section 61 (1) – a public company shall establish a system of internal controls over its financial reporting and security of its assets and it shall be the responsibility of the board of directors to ensure the integrity of the company’s financial controls and reporting.
  • Section 61 (2) – the directors of a public company shall report on the effectiveness of the company’s internal control system in its annual report.
  • Section 63 – an auditor of a public company shall, in his audit report to the company, issue a statement as to the existence, adequacy, and effectiveness or otherwise of the internal control system of the public company.

It said an industry-wide Committee made up of regulators in the financial system, professional accounting bodies, audit firms and other stakeholders was constituted to develop the Framework for the implementation.

The Framework provides guidelines that are necessary for directors who will implement relevant Internal Controls over Financial Reporting (ICFR) and Auditors who will review same and issue a statement on its existence, adequacy and effectiveness or otherwise.

SEC said this is to ensure that directors have common procedures for the evaluation of ICFR, such that any other reasonably knowledgeable person can re-perform the same procedures and arrive at the same conclusion.

The management of the Commission has reviewed the report of the Committee and incorporated relevant comments obtained from its exposure to relevant stakeholders and the general public.

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SEC Reintroduces Capital Market Operators Registration Renewal