SEC, CBN outline guidelines for securities settlement

The Securities and Exchange Commission (SEC) and the Central Bank of Nigeria have introduced guidelines on securities settlements in Nigeria.

According to the regulators, the guidelines are outlined to promote competitive, efficient, safe and sound post trading arrangements in the Nigerian financial market.

The guidelines set to promote and facilitate the development of efficient and effective systems for settlement of transactions, and should ultimately lead to greater confidence in securities markets and better investor protection and in turn limit systemic risk.

Furthermore, 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 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 on the following exchanges: The Nigerian Stock Exchange-traded securities; Financial Market Dealers Quotation Over-The-Counter Securities; National Association of Securities Dealers Over-The-Counter Securities; Nigerian Commodity Exchange-traded Securities; and the Afex Commodities Exchange.

The CBN and SEC, who will review and amend the guidelines from time to time, have the responsibility of providing oversight functions on securities settlement systems, ensuring adequate laws are put in place to safeguard the interest of all parties, applying appropriate sanctions in the event of default.