Being a Presentation to the House Committee on Capital Market and Institutions by the CIIA at the Public Hearing on the Proposed Bill on the Chartered Institute of Securities and Investment (HB 1858)

Distinguished Chairman and Honourable Members,

We thank you for this invitation to contribute to this important matter of Nation building, particularly on the progress of our Capital market.

We have painstakingly followed the trajectory of this bill's development since its first introduction in year 2011 and are aware several amendments have been made to it. In the process, we have expressed our professional views as well as objections to certain clauses and references in the Bill which will be counterproductive to the growth of the Capital market.

We are here today to express our views and objections to passing a bill proposing to oversee and regulate the practice of all investment management professionals in the areas of Securities and Investment business in Nigeria. This is based on the following critical points/reasons:

1. The Nigerian Capital market currently does not need a new law to ensure or enforce discipline amongst its market operators as is the fundamental objective of the bill. The ISA 29 of 2007, which is currently under review by this National Assembly provides more than enough legal powers for the market regulator to carry out this function. The passage of this bill into law is therefore an insinuation that the Securities and Exchange Commission - SEC, is incapable of regulating and controlling professionals in the Capital market. We therefore request that the explanatory memorandum and every other portion of this bill to restrict the activities of the CISI to its members; to avoid constituting and sending a wrong signal to the global industry on how the Nigeria’s Capital market is being regulated.

2. The verbiage of the bill appears to subtly coerce all professionals in the Nigerian capital market, into one single body of different and diverse roles and functions irrespective of what global best practice is. The proposed CISI bill as is, will create an unwieldy structure of conflicting career pursuits in the market, despite existing structures instituted by the SEC to accommodate diversity within the Securities & Investment business in Nigeria. This is a bid to legislating a monopoly into existence, even if that is not the intention and it should not be encouraged.

3. The investment management industry is represented by a number of different career interests on two opposing sides of the market that global best practices frown at bringing under any form of unified regulation or supervision other than governments, as represented by the SEC, to forestall conflicts of interests. In the US, FINRA is the Brokers' unified body with self-regulatory functions over its sell side members, and it reports to the US SEC, whilst the US SEC principally provides direct protection for investors on the buy side through the 1940 Acts. In the CISI UK, the professional body only has self-regulatory authority over its own membership, which is optional and not for the entire UK market. Once these structures and their implications for market integrity are well understood by all, this bill seeking to regulate and control the activities of all professionals despite their belonging to other SEC regulated Trade Groups is an infringement and not in line with global best practice.

4. Whilst The CIIA appreciates that there is genuine concern over the low level of trust in the market, bringing all professionals in the capital market under one professional body is not the cure for such a challenge. Enforcement actions is the critical thing here, and the SEC is well empowered by law to ensure this. In addition, each capital market trade group already possesses approved Ethical Codes and Standards of Professional Conduct to enforce discipline amongst its members. We therefore request that this honourable House, compel the limiting of scope of the proposed Bill to CISI registered members and expunge every reference to the phrase ‘professional practice in the areas of Securities & Investment business in Nigeria.

5. The capital market as a global institution is not known to be accommodating or responsive to the type of administration being designed through the size and composition of the proposed governing council in the bill. Truly free and nimble markets the world over are evolving farther away from the extricating reach of bureaucracy. The CIIA is of the conviction that the Nigerian Capital market should be moving forward in the same direction as a private sector led institution and it should be reflecting in every decision-making process affecting our market in line with prevalent global dynamics.

7. Finally, our Trade Group - the CIIA wishes to reiterate that what all hands should be doing on deck now, is how to strengthen enforcement actions in our market, given the fact that such instruments of power to achieve that has never been in short supply. A new and expanded professional institute of all market operators as is being proposed in the bill offers no immediate or remote reassuring results that all may change as soon as might have been envisaged.

8. The CIIA hereby wishes to call for the withdrawal of the CISI bill as is, in order to avoid legislating a Monopoly and usurping the regulatory functions of the Securities & Exchange Commission (SEC).

For further clarifications, comments or observation, kindly contact the CIIA via email at [email protected] and/or on twitter: @CIIANigeria