The House of Representatives’ Speaker, Femi Gbajabiamila, on Tuesday said the legislature cannot allow deficiencies in the capital market that cause investors to worry about the safety of their investments.
The speaker, who stated this while declaring open a public hearing organised by the House Committee on Capital Market and Institutions, said, “In this new global economy, investors have the option to quickly move money across industries, nations and continents.”
Represented by Peter Akpatason, the House Deputy Majority Leader, Gbajabiamila said capital markets provide access to funding for new and existing businesses to innovate, expand, adapt to market changes and thrive.
The hearing was on two bills seeking to enhance the operation and performance of the capital markets in Nigeria with the overall aim of engendering economic development.
They are ‘A bill for an Act to repeal the Investment and Security Act, 2007 and enact the Investments and Securities Bill to establish Securities and Exchange Commission as the apex regulatory authority for the Nigerian capital market as well as regulation of the market to ensure capital formation, the protection of investors, maintain fair, efficient and transparent market and reduction of systematic risk and for related matters’, and ‘A bill for an Act to repeal the Chartered Institute of Stockbrokers, CAP. C 9 Law of the Federation of Nigeria 2004 and provide for establishment of Chartered Institute of Securities and Investments and related matters.’
The speaker said, “The capital markets also allow small and large-scale investors to contribute to the growth of enterprises and, by so doing, increase the values of their assets and create wealth. Therefore, it is abundantly evident that the proper and efficient operation of the capital market is essential to sustainable national economic growth.
“Both bills for consideration today are in keeping with our commitment in the legislative agenda of the 9th House of Representatives to pursue far-reaching reforms of critical institutions in our country. Our ultimate goal is to ensure that these institutions are properly grounded to perform their functions, execute their mandates and serve the best interests of the Nigerian people.
“The need to ensure that the operations of the capital markets and the entire industry sector are sufficiently fair and transparent to ensure investor confidence is of particular concern. It is often said that capital is cowardly and will run at the slightest risk.”
In his welcome address, Hon. Babangida Ibrahim, the chairman of the committee, said the House and the panel are determined to ensure Securities and Exchange Commission (SEC), which regulates the capital market, delivers on its core mandates to ensure due registration of players in the capital market, market integrity, avoid systematic risks, guarantee inspections, amongst others.
“The House Committee on Capital Market and Institutions, which I humbly chair by the grace of Almighty Allah and the choice of the House, led by our own Speaker, Rep. Femi Gbajabiamila, is indeed proud of these bills as they seek to ensure a more robust, vibrant, prosperous and accountable capital market and also to ensure the capital market is well institutionalized and accountable.
“Indeed the House has invested huge time and resources in coming up with these 2 bills which we hope will ensure the resources of Nigerians in the capital market remain safe, accounted for and prosperous. The capital market is a laudable tool for wealth creation, and we as representatives of the people will ensure this is true for Nigerians.”
Similarly, stakeholders in their presentations threw their weights behind the bills particularly, the proposed legislation for a provision that the investor protection fund set up by securities exchanges would compensate investors who suffer pecuniary losses arising from the revocation or cancellation of the registration of a dealing member firm.
The stakeholders also expressed delight over the provision in the bill prohibiting ponzi/pyramid schemes as well as other illegal investment schemes and prescribed a jail term of not less than 10 years for promoters of such schemes.
In a presentation, Lamido Yuguda, the Director General, Securities and Exchange Commission (SEC), said Nigeria needs and deserves an internationally competitive and well-functioning capital market to facilitate the on-going economic diversification and passage as well as enactment of the Investments and Securities Act 2022 will be a pivotal step in that direction.
“This bill contains an entirely new part which provides for the regulation of Commodity Exchanges and Warehouse Receipts. These provisions are essential to allow for the development of the entire gamut of the commodities ecosystem.
“The bill contains provisions which address the existing restrictions in respect of raising of funds from the capital market by sub-nationals to allow for greater flexibility in this regard.
“Some provisions in the ISA 2007 pertaining to the composition of the tribunal, functions of the minister, vacancy, constitution of the tribunal, qualification and appointment of the Chief Registrar as well as the jurisdiction of the tribunal have been amended in the bill to enhance the ability of the tribunal to optimally discharge its mandate.
“It is a well-known fact that efficient capital markets are indispensable to the functioning of a modern economy. No economy can achieve any meaningful advancement without the important role capital markets play in supplying medium to long term finance,” Yuguda said.
Olawale Adeosun, the President of the Chartered Institute of Stockbrokers who also spoke in support of the bill said: “In view of our various engagements with the Securities and Exchange Commission with respect to this bill, the Chartered Institute of Stockbrokers hereby expresses its utmost confidence in the National Assembly and this committee to do utmost to facilitate the expeditious passage of the bill.”
In their various presentations, representatives of the NGX, Issuing Houses of Nigeria, Association of Security Dealers, among others, also supported the proposed legislation.