Executive Interview with SEC DG:

(Segment-2):

 Capital market reacts to activities in the system-Says SEC DG

…Calls for factual reporting of capital market in election year

…Warns investors on risk of unlisted investments, securities

 (This is the follow-up of segment-One interview published yesterday on how ‘Regularisation of accounts will increase liquidity in Capital market’):

 By Udeme Clement

The Nigerian Capital Market Committee, CMC, held its second quarterly meeting for 2018 fiscal year recently. The meeting is a periodic gathering of stakeholders in Nigerian capital market, to discuss capital market related activities. The Acting Director General, Securities and Exchange Commission, SEC, Ms. Mary Uduk, spoke with Journalists on the outcome of the meeting.

What are the measures put in place to prevent the market from reacting during 2019 elections?

 The market must react whether positively or negatively. Irrespective of measures we put in place, the market reacts to activities that happen in the system. In 2008 during the meltdown, the market reacted to the global situation. Therefore, you should be alarmed if something happens during 2019 elections and the market does not react, we should be worried.

So, irrespective on what we put in place, the market would react. I would rather enjoin gentlemen of the press to help us. The world is now a global village, anything we write here is blown out. I enjoin us to stay on facts, when we do that, I am sure it would be fine. I therefore appeal to you, especially since we are going into an election year to always report with facts.

What is the financial literacy timeline?

We have been working with National Education Research and Development Council, NERDC, on the curriculum. We would soon begin to see traction in respect of Capital Market Studies coming into curriculum of schools.

On the average, what is the time to market?

 Our desire is to review applications within the shortest possible time. If possible within 48 hours and 72 hours we want to be able to give approval.  But there are other factors to consider.  For instance, the documents being filed have to be complete.  There are other issues we need to look at. If a company is supposed to file six documents and they file three, it is not complete filling.

Those underlying documents are what would make you be able to review the main document. Therefore, if they are not filled at the same time, they have to be requested to do so. Most times it takes them substantial time to do that.

When you open the offer documents and find a lot of information or details that are not correct and information that need to be clarified, you have to ask, so that you do not mislead the investors. These are the issues that make us not to give specific time lines within which an application could be reviewed.

We have been working with various stakeholders and now we are engaging solicitors as well.  We are also doing IT related things within the Commission for companies to be able to file electronically,  then we review electronically as well, to fast track the process.

Can we get update on MTN IPO?  If they decide to come to the market, how long would it take to approve it?

Let MTN file first and the day they inform you they have filed, watch what the SEC would do. Not what is being bandied on the pages of newspapers.  We would do our work to the best of our ability.

I would make an exception and allow the press to come and monitor. That is the seriousness with which we view everything that surrounds MTN and other fillings. As we speak, as far as we know MTN is still a private company. Until they convert to a public company, file application with us, that is when the matter should be focused on us.

Another thing you may have to consider is documentation.

The NASD is created for unlisted securities. What are you doing with CAC to ensure that every PLC leverages that platform?

We have been working with NASD. We have come up with a rule of trading in securities. We have collaborated with CAC on this. Secondly, on the issue of unlisted securities, we have an interface with CAC and that essentially is because these Plc, about 17,000, we need to liaise with other regulators to check if their securities are registered with SEC when they bring annual returns. We have also issued a circular and given a deadline of 31 December for all companies that ought to have registered their securities and have not registered. We would decide either to extend it or not. The law provides that they register their securities.

Recently FMDQ shareholders approved the removal of OTC from its name, is that of any significance?

The change of name by FMDQ has not changed what the platform is. It is only a change of name. OTC is an Over the Counter Market where bilateral transactions take place. In the wake of technology and speed, that does not happen anymore. There is a very thin line between trading on an exchange and what you call an OTC. The name change has not changed anything about the functions or nature of the FMDQ as an exchange.

Fin Tech is taking over. What is SEC doing to guide against cross boarder offerings electronically from impacting negatively?

We are trying our best to ensure that investors are not hurt. There is no way we would not encourage innovation, but at the same time, you want to be sure that investors are not hurt. We have witnessed two ICO. We have in-house dedicated Fin Tech team that watches the environment. Also, we have a sandbox on our website to watch what Fin Tech is doing. We don’t want Ponzi to take over and investors get hurt.

Periodically, we issue circular and press release advising investors to be careful on investments and securities that have not been listed. Even IOSCO is still studying the issue and yet to come up with a guideline. SEC is actively involved in the working group of IOSCO and very soon, IOSCO would come up with a guideline.  With that, SEC would come up with guidelines or rules on that. But we just advise investors to be careful.

What are your achievements in the last quarter?

I am glad to inform you that the Nigerian Capital market within the quarter under review witnessed some achievements in various segments if its operations. These achievements validate the continuous efforts of all market participants and are as follows:

Aggressive use of various social media platforms to boost financial literacy campaigns, such as the creation and deployment of one (1) minute Financial Literacy video on YouTube.  The renovation of five warehouses by Nigerian Commodities Exchange, NCX, in preparation for commodities trading;  Conclusion of about 30 cases at the Investment and Securities Tribunal, IST, from a backlog of over 50 cases; Commencement of modalities to introduce Investments and Securities Tribunal Law Reports; Implementation of recommendations of the Commodities Trading Ecosystem in phases, from 2018 to 2025, as well as increase in the number of shareholders who have mandated their accounts for e-dividend payments to 2.55million.