Capital Market Operators Oppose Bill for New ‘Super’ Institute

National Assembly

By Goddy Egene

Some stakeholders have faulted a  new Bill aimed at establishing  the Institute of Securities and Investment (CISI), to replace the current Chartered Institute of Stockbrokers (CIS).
They said the move would impede the flow of long-term capital into the investment markets, further erode investor confidence, and consequently, slow down the growth of the Nigerian economy.

The bill, being sponsored by former Chairman of the Senate Committee on Capital Market, Senator Ganiyu Solomon, is intended to replace the law that set up CIS and will bring other capital market operators under the supervision of CISI.

The Senate Committee on Capital Market has fixed this Wednesday for a public hearing on the proposed bill. However, CFA Society Nigeria (CSN) has faulted the bill and is asking the committee to reject it as drafted.

According to CSN, the bill is not only selfish but sent without consultation with other stakeholders in the market. CSN is a local society of members of the global CFA Institute, whose members comprise mainly of CFA charter holders and CFA Institute members resident, practicing or interested in the Nigerian securities and investment industry in various capacities.

CSN said in a memorandum to the committee that: “Conceptually, we are not opposed to an umbrella body for the securities and investment industry but we are opposed to a process where the CIS unilaterally transforms itself into that body without any collaboration, input and contribution from the ‘non-stockbroker’ stakeholders and players within the ‘securities and investment industry’, a much bigger community encompassing different focus areas and consequently, different skill sets.”

The body explained that the entire securities and investment profession and professionals working and practicing in Nigeria, comprise many other professionals including: fund & portfolio managers; trustees; investment bankers; financial advises; investment analysts; financial analysts; treasurers; bond dealers and traders; foreign exchange dealers and traders, custodians, private equity managers and venture capitalists among others.

CSN also raised concerns about the proposed bill including confusion about its status in the market and conflict of interests considering the proposed membership of its council.

“The bill as currently drafted, is unclear as to the exact status or intention for the proposed Institute, that is, is it a regulator of the Securities and Investment business (a role which, by law, is currently performed by the Securities and Exchange Commission (SEC) or an industry Trade Group that is interested in setting minimum practitioner standards for the industry in order to maintain the integrity and continued viability of the securities and investment business?

“If the intention is that the CISI becomes a regulator, then the bill as currently drafted, is seeking to duplicate the regulatory functions of the SEC in investment practice within the country. The industry can hardly afford another layer of red tape,” CSN said.

The group also faulted the provision in the bill for corporate membership of CISI, saying companies and Individuals are currently licensed by the relevant government regulatory agencies (SEC and NSE mainly) to practise in the different sectors of the securities and investment business.

“While skills and ethics of individual players can be within the ambit of the proposed CISI, we do not see the essence of requiring corporate entities to register since they are licensed by law. We see this as an unnecessary duplication of membership since individual members of the body are still going to be the key management of the corporate entities. We are particularly wary of a situation where membership of the Institute will, sooner than later, be an additional basis for which duly licensed players can practice,” the group said.

In the light of the foregoing, CSN has urged the Senate committee to reject the proposed bill as drafted, as “it is significantly flawed and has a long-term negative impact on our investment markets. This will serve to impede the flow of long-term capital into our markets, further erode investor confidence, and, consequently, slow down the growth of our economy.”