Being the response from the Chartered Institute of Stockbrokers of Nigeria (CIS), dated Monday, October 05, 2020, to the letter from The Association of Corporate and Individual Investment Advisers(CIIA) on observations about the planned Chartered Institute of Securities and Investment Management (CISIM) Bill.

The Proposed Bill on the Chartered Institute of Securities & Investment (CISI)

The Chartered Institute of Stockbrokers (CIS) hereby acknowledges receipt of your letter dated September 21, 2020, on the above-referenced subject and appreciates the Association of Corporate and Individual Investment Advisers (CIIA) for reaching out to the Institute on the subject.

However, the CIS noticed from the content of your letter that the concept and intent of the CISI Bill (now renamed CISIM) seemed to have been grossly misconceived by the CIIA, and our response below seeks to clarify the issues raised therein. We do hope the CIIA will carefully and objectively review our response for a holistic view of the subject.

1. About CIS

CIS was established by Act 105 of 1992 as a not-for-profit professional institute providing certification and training for professionals in stockbroking, securities and investment, fund and portfolio management, asset management, investment management, and other related fields. It is also responsible for the regulation and discipline of members of the profession. 

The ACS qualification is a postgraduate qualification, which is widely recognized for people working in the capital market, financial services industry, fund and investment management. Our qualification compares favorably with other foreign qualifications given its rigorous and practice-oriented content and examination. Holders of the ACS qualification are highly skilled personnel, eminently qualified by virtue of the qualitative, rich and relevant training they had undergone before achieving the certification, with many of them presently occupying lop positions in both the private and public sector of the economy.

The CIS has a Code of Ethics and Standards of Professional Conduct, which conforms with international best practices. Members are expected to abide by the Codes and Standards and exhibit the highest level of ethical behavior and professional conduct in providing service to their clients, and discharge of obligation in whatever capacity they operate in the industry.

As provided by the Act that established it, the Institute has disciplinary machinery which promptly attends to complaints on any member and meets out appropriate sanctions as deemed necessary on proven professional misconduct. The disciplinary scheme consists of an Investigating Panel and a Disciplinary Tribunal, which have a legal assessor in attendance at all times. The Rules of the Tribunal are approved by the Honorable Minister of Justice & Attorney General of the Federation. 

CIS is a member of the Association of Professional Bodies of Nigeria (APBN), and the Association of Certified International Investment Analysts (ACIIA) based in Switzerland. Our qualification (ACS) is approved for exemption from the foundation and National Examination levels of ACIIA like our counterparts in Europe. Asia and Americas. The affiliation not only affords us the opportunity to benchmark our qualifications with international standards. It also ensures that our members could compete favorably with their counterparts in foreign investment centers. Indeed, some of our members have achieved the CIIA certification, which is recognition of a superior standard of applied common knowledge that is essential for working in domestic and international investment markets. Fellows and Associates of the CIS are also eligible for direct admission as members of the Chartered Institute for Securities and Investment (UK). 

Since its inception, the Institute has certified over 2500 qualified securities and investment professionals who are mostly top Managers and Executives in various organizations in different sectors of the economy including banks, insurance companies, stockbroking firms, issuing houses, pension fund administrators and regulatory agencies. 

Related: The Chartered Institute of Securities and Investment Bill 2020

2. The CISIM Bill 

The CISM Bill is a Bill for an Act to repeal the Chartered institute of Stockbrokers Act, Cap. C9 LFN 2004 and provide for the establishment of the Chartered Institute of Securities and Investment Management to set standards of knowledge, ethical conduct & practice, certify, train, discipline and direct the practice of securities and investment profession and for related matters. 

The following are the rationale for the CISIM Bill:

• To train and certify all core operators engaged in securities dealing in the capital market.
• To allow practitioners specialize in whichever segment of the market they choose to operate. 
• To assimilate professionals with foreign training and certification. 
• To bring standardization of training and certification into the Nigerian Capital Market thereby ensuring that only qualified and competent professionals operate in the market.
• To fully reflect the scope of training, experience and capacity of CIS members to operate in all segments of the capital market beyond trading on the floor of the Nigerian Stock Exchange, NASD. LCFE etc.

The need for a review of the existing structure for training and certification of professionals in the Nigerian Capital Market, as justified above, in response to significant changes that have taken place in the Nigerian Capital Market over the years, is the reason for promoting the CISIM Bill. The CIS considers this to be an auspicious moment for all stakeholders in the market to work together. review the structures and processes in the market with a view to effecting necessary adjustments so that the growth and development of the Capital Market can be sustained seamlessly as we all desire. It is crucial that we continue to maintain order in the market to ensure that the progress we have made over the years is not truncated. 

This quest to drive needed changes for sustained market growth and development is the norm in progressive markets, and we should not aspire for less in Nigeria. For instance, in 2015, the South African Institute of Stockbrokers (SAIS), taking cognizance of evolving challenges in the South African financial markets took steps to reposition and transform the financial services industry by proposing major structural changes with education and ap capacity building at the heart of the process. Ultimately, in May 2015, the scope of operation of SAIS was widen by legislation to include the total Financial Markets Industry. 

In the UK. the Securities and Investment Institute (SII) was changed to Chartered Institute of Securities and Investment (CISI) by an act of parliament in 2009, and is now a leading professional body for securities, investment, wealth and financial planning professionals. The CISIM has existed alongside the Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA) without any problem. in the US, the Financial Industry Regulatory Authority (FINRA)exists alongside the US Securities and Exchange Commission (SEC). Similarly, in Nigeria, the CISIM would exist alongside the Securities and Exchange Commission (SEC), the Central Bank of Nigeria and other regulators with each body having its clear-cut responsibilities and boundaries. 

Editor's Note:  The CISI was formed in 1992 as the Securities and Investment Institute (SII) by the members of the London Stock Exchange. It changed its name to the Securities and Investment Institute in November 2004. On Friday, October 09, 2009, Her Majesty the Queen signed the Charter formally creating the Chartered Institute for Securities & Investment (CISI). In November 2015the Institute of Financial Planning was formally merged into the CISI. In 2017, CISI, the Chartered Insurance Institute and the Chartered Institute of Bankers in Scotland formed the Chartered Body Alliance.

Itis worthy of emphasis that the role of CISIM will not in any way conflict with the role of regulators like the Securities and Exchange Commission (SEC) and Central Bank of Nigeria (CBN). As it is applicable globally, a professional institute sets standards of knowledge to be attained by members of' the profession, certifies them and promotes the highest level of ethical conduct and professional behavior among its members. Any members who falls short of the required standard of conduct and behavior is sanctioned as appropriate by the institute. It is only in this sense that CISIM will 'regulate' the conduct of its members. The role of SEC and CBN as the apex regulator of the Capital Market and Money Market in Nigeria respectively has never been in doubt or contested, and will not be conflicted by the CISIM Bill. 

Further, in most parts of the world, in professions like Medicine, Engineering, Accountancy, Law, etc. members are at liberty to specialize and practice in any given course/area of their choice, thus giving room for the specialists to aggregate and articulate their interests as Associations/Trade groups in the industry but deriving powers from the originating Act of the Parliament. i.e., Nigerian Medical Council. Council of Registered Engineers in Nigeria (COREN), the Institute of Chartered Accountants Nigeria, Council of Legal Education. etc. A similar structure will emerge with the passage of the CISIM Bill. 

3. Advocacy Efforts for the CISIM Bill 

The CIS' approach to the CISIM Bill over the years has been to engage key stakeholders extensively with a view to getting their buy-in and to achieve greater inclusiveness. However, it is important to reemphasize that CIS is a creation of the laws of the Federal Republic of Nigeria and the current CIS Act105 of 1992 already covers implicitly all the areas of securities dealing that the new CISIM Bill seeks to clearly highlight. For instance, the role of stockbrokers as investment Advisers in the Nigerian Capital Market has never been in doubt or contested. Even, the apex regulator. SEC accords stockbrokers this recognition. 

Nevertheless, the CIS takes cognizance of the dynamic changes that have taken place in the Nigerian Capital Market over the years has continued to work with all stakeholders to maintain order in the market. For the avoidance of doubt. We would like to put on record that the CIS has had series of engagement with the underlisted groups and continues to be open to further engagement on this matter. 

1. Association of issuing Houses of Nigeria (AIHN)
2. Fund Managers Association of Nigeria (FMAN) 
3. Financial Market Dealers Association (FMDA) 
4. Institute of Capital Market Registrars (ICMR) 
5. Association of Investment and Portfolio Managers (IAPM) 
6. CFA Society of Nigeria 

Specifically, starting from last year (2019) several meetings of the above-listed CISIM Stakeholders groups were held culminating in the formation of two sub-committees populated by members of groups and CIS to discuss and agree respectively on 

1. the Governance Structure of the proposed Institute; and 
2. MOI to be signed by the parties. 

All the parties were duly represented and contributed robustly to the discussions resulting in two reports that respectively presented a Governance Structure and a draft MOU to be signed by the parties. As you may be aware, four of the organizations have signed the agreed MOU - CIS, AHIN, FMAN and IAPM. 

You may have read in the media some objections raised against the CISIM Bill by the  FMDA  and CFA Society, who were engaged in several meetings as part of the CISIM Stakeholder Group, and whose representatives were involved in drafting the MOU. A critical appraisal of their argument will show that it does not hold water.

Given the points highlighted above, and whilst the Institute remains open for discussions and engagement with any willing party, the CIS is convinced that the pursuit of the CISIM Bill is a noble course that should be pursued vigorously. Indeed, the CIS believes that to sustain development and progress in the Nigerian Capital Market, law and order must prevail. 

We appreciate your good intention and cooperation. Please accept the assurances of our esteemed regards. 

Related toCIS and the CISIM Bill

1. The Imperative for Adherence to Best Practice Market Structures in Proposed CISIM Bill - CIIA - Proshare, Oct 05, 2020
2. Proposed CISIM Bill Dangerous to Nigeria's Capital Market Development - CFA Society, Sept 30, 2020
3. Why we are Floating a New Institute - Chartered Institute of Stockbrokers - Proshare, Sept 17, 2020
4. Four Professional Bodies Sign MoU to Float Securities Institute - Thisday, Sept 17, 2020
5. FMDA rejects plan to float Chartered Institute of Securities and Investment; says CISI Bill risky for financial market operations, economy - BusinessDay, Aug 23, 2020
6. Chartered Institute of Stockbrokers Elects New President and Governing Council Members - Proshare, May 20, 2020
7. The CIIA Code of Ethics and Standards of Professional Practice for Registered Investment Advisers in Nigeria - Proshare, Mar 12, 2019
8. CISI Bill 2013: NSE Presents Memo to Senate  - Investor Advocate, Oct 02, 2013
9. PDF - The Chartered Institute of Securities and Investment Bill 2020
10. PDF - The INVESTMENTS and SECURITIES ACT (ISA) 2007 - and Updates
11. PDF - The Chartered Institute of Stockbrokers (Amendment) Act 2016
12. PDF - The Chartered Institute of Stockbrokers Act Cap 29 2004
13. The Securities and Exchange Commission (SEC) Nigeria
14. The Nigerian Stock Exchange
15. The FMDQ Securities Exchange Limited
16. The National Association of Securities Dealers (NASD) OTC Securities Exchange Ltd
17. The AFEX Commodities Exchange
18. The Lagos Commodities and Futures Exchange
19. The Chartered Institute of Stockbrokers of Nigeria (CIS)
20. The Chartered Institute for Securities & Investment (CISI)
21. The U.S. Securities and Exchange Commission
22. Financial Industry Regulatory Authority (FINRA), USA
23. The Financial Conduct Authority UK
24. The Prudential Regulation Authority UK
25. Guide to financial protection in the UK
26. Breaking down which types of firms are considered "sell side" and which are "buy side"

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