The House of Representatives, yesterday, passed for second reading, a bill to repeal the Investments and Securities Act (ISA) 2007 and enact the Investments and Securities Act to establish Securities and Exchange Commission (SEC).
The bill, which seeks to make SEC the apex regulatory authority for the Nigerian capital market, prescribes 10-year jail term for ponzi scheme operators, in the country, among others.
The proposed legislation, which is sponsored by Babangida Ibrahim, also empowers SEC to shut down all illegal investment schemes.
Ibrahim, in his lead debate, said current trends in the capital market has made the review of the Investments and Securities Act, Act No. 29 of 2007, enacted 14 years ago, imperative.
He noted that the proposed legislation would make the Nigerian capital market conform with international best practices.According to him, the major essence of the bill are introduction of new provisions to regulate the activities of financial market infrastructure, as well as netting and bankruptcy provisions to protect investors in derivatives contracts.
Ibrahim said: ”there are new provisions on the regulation of Financial Market Intermediaries (FMIs) such as Central Counter Parties (CCPs), Clearing Houses, Trade Depositories etc.
“The general law of insolvency would have no effect on market contracts or action taken under the rules of an exchange, FMI with respect to market contracts, or an action taken to transfer any collateral.
“Furthermore, no entity, trade association can operate or hold itself out as a Self Regulatory Organization (SRO) unless recognised or registered as such by SEC. The responsibilities of SRO are also well spelt out, while a new provision has been introduced on netting of financial contracts.”
He added: “We are enhancing provisions relating to efficient regulation of investment scheme. Recently there is a lot of complaints by Nigerians to the extent the Federal Government itself put some embargo on some accounts on Ponzi schemes. So as of the time of signing the current account, the ponzi scheme was not in existence in Nigeria. So we have to put some regulations to monitor them.”