The Securities and Exchange Commission (SEC), Nigeria is the highest regulatory institution of the Nigerian capital market. Also, it is supervised under the Federal Ministry of Finance. As the apex regulatory body of the Nigerian capital market, the Nigerian Securities and Exchange Commission regulates and supervises all affairs and activities of the Nigerian capital market.
The history and origin of the commission date back to the establishment of an hoc and a non-statutory Capital Issues Committee in 1962, which was formed by the government as an essential arm of the Central Bank of Nigeria (CBN). In 1973, this commission later metamorphosed into the Securities and Exchange Commission, after a comprehensive review of the Nigerian financial system, with the promulgation of SEC Decree No. 71 of 1979.
Successive reviews of the first enactment led to the introduction of new legislation known as the Investments and Securities Act (ISA) No 45 of 1999. The ISA No. 45 of 1999 was revoked and the promulgation of the ISA No. 29 of 2007, which gave the Commission its current power.
A second-tier securities market was established in Nigerian in the year, 1985, and the securities market grew as the government made a program of privatization of the public sector enterprises. In 1980, the market capitalization was at N4.46 billion and by the end of 1997, the Nigerian securities market had witnessed a market capitalization of N281.8 billion. The securities market appeared to be operating effectively and efficiently, although it was depressed by small personal incomes in Nigeria and the political instability which discouraged foreign direct investment.
Functions of the Nigerian Securities and Exchange Commission (SEC)
Market Regulation
One of the functions of the Securities and exchange commission is to regulate the market. They handle the task of undertaking some activities which are done to protect market operators, investors and also to ensure market integrity. If investors are not properly protected by the Nigerian SEC, there will be no significant investment in the Nigerian capital market and if there is no investment, the business would crumble. To ensure that the market is stable, the SEC ensures transparency and makes sure that there is total compliance to the rules of the Nigerian capital market.
Surveillance
Surveillance is carried out by the Nigerian Securities and Exchange Commission over trading systems and exchanges to forestall breaches of the market as well to deter and detect manipulations & trading practices that are capable of causing market disruption.
Investigation
Also, it investigates cases of alleged breaches of the rules, laws and regulations guiding the affairs of the capital market and it enforces sanctions on the law breakers where appropriate.
Inspection
This is either done “onsite” or “off-site”. SEC calls for information from capital market operators at regular intervals. It also undertakes and conducts audits and inquiries of any participant in the capital market whenever necessary.
Rule making
The Commission makes rules to govern the market as developments occur. This move is done so as to ensure that the Commission meets up with the best international practices. Moreover, the Nigerian Securities and Exchange Commission is there to assist the Nigerian capital market and ensure that there is development in the market