NEW RULES AND SUNDRY AMENDMENTS TO THE RULES AND REGULATIONS OF THE COMMISSION

NEW RULES AND SUNDRY AMENDMENTS TO THE RULES AND REGULATIONS OF THE COMMISSION

NEW RULES AND SUNDRY AMENDMENTS TO THE RULES AND REGULATIONS OF THE COMMISSION

Pursuant to Section 313 of the Investments and Securities Act, 2007, the following new Rules and sundry amendments are added/made to the Commission’s Rules and Regulations.

1. ASSET MANAGER CODE OF PROFESSIONAL CONDUCT

1.1 General Principles of Conduct

Managers have the following responsibilities to their clients.

Managers must:

1. Act in a professional and ethical manner at all times.
2. Act for the benefit of clients.
3. Act with independence and objectivity.
4. Act with skill, competence, and diligence.
5. Communicate with clients in a timely and accurate manner.
6. Uphold the applicable rules governing capital markets.

1.2 CODE OF PROFESSIONAL CONDUCT

1.2.1 Obligation to clients

Managers must:

1. Place client interests before their own.
2. Preserve the confidentiality of information communicated by clients within the scope of the Manager–client relationship.
3. Refuse to participate in any business relationship or accept any gift that could reasonably be expected to affect their independence, objectivity, or loyalty to clients.

1.2.2 Investment Process and Actions

Managers must:

1. Use reasonable care and prudent judgment when managing client assets.
2. Not engage in practices designed to distort prices or artificially inflate trading volume with the intent to mislead market participants.
3. Deal fairly and objectively with all clients when providing investment information, making investment recommendations, or taking investment action.
4. Have a reasonable and adequate basis for investment decisions.
5. When managing a portfolio or pooled fund according to a specific mandate, strategy, or style: a. Take only investment actions that are consistent with the stated objectives and constraints of that portfolio or fund. b. Provide adequate disclosures and information so investors can consider whether any proposed changes in the investment style or strategy meet their investment needs.
6. When managing separate accounts and before providing investment advice or taking investment action on behalf of the client: a. Evaluate and understand the client’s investment objectives, tolerance for risk, time horizon, liquidity needs, financial constraints, any unique circumstances (including tax considerations, legal or regulatory constraints, etc.) and any other relevant information that would affect investment policy. b. Determine that an investment is suitable to a client’s financial situation.

1.2.3 Trading

Managers must:

1. Not act or cause others to act on material non-public information that could affect the value of a publicly traded investment.
2. Give priority to investments made on behalf of the client over those that benefit the Managers’ own interests.
3. Use commissions generated from client trades to pay for only investment-related products or services that directly assist the Manager in its investment decision making process, and not in the management of the firm.
4. Maximize client portfolio value by seeking best execution for all client transactions.
5. Establish policies to ensure fair and equitable trade allocation among client accounts.

1.2.4 Risk Management, Compliance and Support

Managers must:

1. Develop and maintain policies and procedures to ensure that their activities comply with the provisions of this Code and all applicable legal and regulatory requirements.
2. Appoint a compliance officer responsible for administering the policies and procedures and for investigating complaints regarding the conduct of the Manager or its personnel.
3. Ensure that portfolio information provided to clients by the Manager is accurate and complete and arrange for independent third-party confirmation or review of such information.
4. Maintain records for an appropriate period of time in an easily accessible format.
5. Employ qualified staff and sufficient human and technological resources to thoroughly investigate, analyze, implement, and monitor investment decisions and actions.
6. Establish a business-continuity plan to address disaster recovery or periodic disruptions of the financial markets.
7. Establish a firm-wide risk management process that identifies, measures, and manages the risk position of the Manager and its investments, including the sources, nature, and degree of risk exposure.

1.2.5 Performance and Valuation

Managers must:

1. Present performance information that is fair, accurate, relevant, timely, and complete. Managers must not misrepresent the performance of individual portfolios or of their firm.
2. Use fair-market prices to value client holdings and apply, in good faith, methods to determine the fair value of any securities for which no independent, third party market quotation is readily available.

1.2.6 Disclosures

Managers must:

1. Communicate with clients on an ongoing and timely basis.
2. Ensure that disclosures are truthful, accurate, complete, and understandable and are presented in a format that communicates the information effectively.
3. Include any material facts when making disclosures or providing information to clients regarding themselves, their personnel, investments, or the investment process.
4. Disclose the following: a. Conflicts of interests generated by any relationships with brokers or other entities, other client accounts, fee structures, or other matters. b. Regulatory or disciplinary action taken against the Manager or its personnel related to professional conduct. c. The investment process, including information regarding lock-up periods, strategies, risk factors, and use of derivatives and leverage. d. Management fees and other investment costs charged to investors, including what costs are included in the fees and the methodologies for determining fees and costs. e. The amount of any soft or bundled commissions, the goods and/or services received in return, and how those goods and/or services benefit the client. f. The performance of clients’ investments on a regular and timely basis. g. Valuation methods used to make investment decisions and value client holdings. h. Shareholder/unit holder voting policies. i. Trade allocation policies. j. Results of the review or audit of the fund or account. k. Significant personnel or organizational changes that have occurred at the Manager. l. Risk management processes.

2. FIXED INCOME PRIMARY ISSUANCE FEES

(Table detailing fee rates for various cost centres including SEC, NSE, FMDQ, and service providers.)

3. EQUITY PRIMARY ISSUANCE FEES

(Table detailing fee rates for various cost centres for equity issuance.)

4. SUNDRY AMENDMENTS

LEGEND

• Provisions in strikethrough signify deletions
• Provisions in Bold letters signify additions
• Provision followed by .... signify preceding content

1. Rule 56 (1) - Functions of Brokers

Registered brokers shall have the following functions amongst others- ....... (b) providing technology platform for clients to trade under clients account; (c) disclose to the Commission any dealings in a security valued at a minimum of N50 million 500,000 units executed in a single deal or in multiple deals on the same day on behalf of his clients; (d) providing investment advice to clients; (e) publishing investment research; (f) report any suspected market manipulation or insider dealing to the Commission within 48 hours.

2. Rule 67 – SUB-BROKER; Registration Requirements (d) copy of Return on allotment and particulars of Directors (Forms CO2 and CO7) certified by the Corporate Affairs Commission; (j) evidence of minimum paid-up capital of N10 million; (k) letter of recommendation and undertaking signed by the sponsoring Broker/Dealer on behalf of the Sub-Broker. (n) operational manual and organizational chart; (o) any other information or document that may be required by the Commission from time to time

Rule 67 (2) Individual Sub-Broker (Deleted) (Content removed)

4. Rule 84 – Functions of Issuing House (5) underwriting issuance of securities (6) sponsoring issuers of publicly offered/privately placed fixed income securities including bonds (sovereign, agency, sub-national, corporate and supranational), asset-backed or mortgage-backed securities and mutual funds for listing on a recognized Exchange. (7) any other roles ancillary to any of the above

6. Rule 89 (1) – UNDERWRITERS; Eligibility No person, other than an Issuing House, may act as underwriter in any public issue of securities unless such a person is registered by the Commission to perform the function.

7. Rule 89 (2) (b) insurance companies;

8. Rule 92 – Functions of Fund/Portfolio Managers (2) selection of securities for the fund/portfolio in exercise of a discretionary mandate;

9. Rule 178 (1) – Capital Market Experts Or Professionals; Registration Requirements (1) The following experts/professionals whose opinion impact directly on capital market transactions are subject to registration by the Commission: ... c) engineers; d) property managers; e) any other expert/professional that may be determined by the Commission from time to time.

10. Rule 179 – REPORTING ACCOUNTANTS The Reporting Accountant to an entity cannot act as Auditor to that same entity or affiliated entity.

11. Rule 181 – ESTATE SURVEYORS 181(4) The estate valuer to an entity cannot act as property manager to that same entity or affiliated entity.

12. RULE ON TRADING IN UNLISTED SECURITIES – INCLUSION OF DEBT SECURITIES (Rules mandate that all securities of public unlisted companies and all debt securities issued in Nigeria be traded only via SEC-registered facilities.)

13. RULES ON REGISTRATION OF ALL CAPITAL MARKET OPERATORS WITH RELEVANT TRADE GROUPS/ASSOCIATIONS (Rules regarding mandatory membership of SROs or Trade Associations.)

14. RULE 35 (7)- CHANGE OF STATUS OF REGISTRANT (Provisions for late filing fees and registration suspension for non-compliance.)

15. RULE 314- COST OF ISSUE Total cost of issue shall not exceed 2.833% for equity and 2.293% for bonds.

16. RULE 420- RULE ON GLOBAL DEPOSITORY RECEIPTS (Comprehensive framework for the regulation of sponsored and unsponsored Global Depository Receipts.)

17. RULE 456(1)(f)- OBLIGATIONS OF THE CUSTODIAN OF A COLLECTIVE INVESTMENT SCHEME Custodian must be independent of the fund manager and trustee.

18. SCHEDULE I (Updated registration fees for various market functions.)

19. SCHEDULE VI (Basis for computation of bid/offer prices for collective investment schemes.)