NASD gains as SEC unveils new rules on trading unlisted securities

The NASD OTC may be the major winner as the Securities and Exchange Commission (SEC) last week quietly broadened the scope of the Nigerian capital market by releasing new rules on trading unlisted securities.

The rules make it illegal to transfer public securities through dark pools and away from the apex regulator’s oversight.

It also imposes a restriction on those who can act as transfer agents – the service can now only be legally carried out by Qualified Stockbrokers (in good standing with the SEC and NASD OTC).

This brings to an end a long standing regime of non-authorised operators (nicknamed ‘jobbers’) brokering unrecorded transactions.

The new set of rules also expands the horizon of publicly tradable securities and opens up a new terrain for the country’s fast growing (possibly underinvested) pension deposits.

Stakeholders say the muted entry of this rule however understates its significance in advancing the Nigerian capital market.

“Exciting times lay ahead for our untapped OTC markets. We expect to see greater transparency in capital market transactions; the continued emergence of a truly globalised stock broking industry and a much deeper and broader capital market,” NASD OTC Nigeria’s main exchange for trading unlisted securities, said in a statement.

“In the coming weeks, NASD OTC will expand the trading list to include all eligible securities that can trade exclusively OTC.  This will be communicated through our website, newsletters and Participating Institutions,” the exchange said.

PATRICK ATUANYA