SEC to enforce new measures in capital market

As part of its mandate to protect investors and develop the market, the Securities and Exchange Commission (SEC) has introduced some new identification measures. These measures, which are to take effect from April 1, 2020, are to ensure accountability, transparency, and stability in the capital market.

Why it matters: They are expected to eliminate the incidence of unclaimed dividends among investors so that they can easily enjoy the benefits accruing to their investments.

In a circular seen by Naiarametrics, which was made available by the capital market regulator, the apex regulator issued the following directives:

  • The stockbrokers should capture the full information of new clients and update the information of the existing ones. The information to be captured are bank account details, bank verification number (BVN), telephone number and /or email address. The acquired information should be validated against the Nigerian Interbank Settlement Systems Limited (NIBSS) and BVN validation portal.
  • The stockbrokers should also update their order management system in order to enable the system to flag off accounts with incomplete know your customer (KYC) information.

According to SEC, the Central Securities Clearing System (CSCS), which is the clearinghouse for stockbrokers, should send to all brokers, in an editable format, a list of the respective broker clients with incomplete records, for them to update and revert to CSCS. No transaction should be effected on any investor account without an updated and validated KYC information.

Consequently, SEC has said it would sanction any broker that consummates a transaction on an account without the relevant KYC or updated and validated information.

The CSCS is going to ensure the transmission of full information to the Registrars after the transactions. In addition, the Registrars should ensure that the new and updated investor and shareholders information transmitted to them are properly captured in the relevant company’s register of members.

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