In order to promote competitive, efficient, safe and sound post trading arrangements in Nigerian financial market, the Securities and Exchange Commission (SEC) and the Central Bank of Nigeria have introduced some sets of guidelines on securities settlements in Nigeria.
This is in pursuant to the powers of the SEC conferred on it by section 13 and further section 312 (3) of the ISA 2007 and in exercise of the powers conferred on the CBN by section 47 (2) of the CBN Act 2007 to promote and facilitate the development of efficient and effective systems for settlement of transactions.
According to a 14 page documents which contains the guidelines, this should ultimately lead to greater confidence in securities markets and better investor protection and in turn limit systemic risk. In addition, the document stated that the guidelines seek to improve the efficiency of the market infrastructure, which should in turn promote and sustain the integration and competitiveness of the Nigerian securities markets.
The scope of the guidelines set out the procedures for the settlement of securities in Nigeria, including the rights and obligations of the parties. It also covers the settlement procedures and settlement cycle for the trades executed in the following exchanges; The Nigerian Stock Exchange traded securities, Financial Market Dealers Quotation, FMDQ Over The Counter (OTC) Securities, National Association of Securities Dealers, NASD Over The Counter (OTC) Securities, Nigerian Commodity Exchange (NCX) traded securities and Afex Commodities Exchange.
The CBN and SEC shall have the following responsibilities, Provide oversight functions on securities settlement systems. Ensure adequate laws are put in place to safeguard the interest of all parties. Apply appropriate sanctions in the event of default. Review and amend the Guidelines from time to time.