SEC Commences 100% Custody Requirement in CIS
BY ROTIMI DUROJAIYE AND AUGUSTINE AVWODE
President Muhammadu Buhari has appointed Ifeanyi Ararume, as chairman of the board of Nigerian National Petroleum Company Limited.
He also appointed Mele Kyari and Umar Ajiya as Chief Executive Officer, and Chief Financial Officer, respectively.
Other board members are; Tajudeen Umar (North East), Mrs. Lami O. Ahmed (North Central), Mohammed Lawal (North West), Margaret Chuba Okadigbo (South East), Constance Harry Marshal (South South), and Pius Akinyelure (South West).
Special Adviser to the President on Media and Publicity, Femi Adesina, said in a statement on Sunday, that Buhari, in his capacity as Minister of Petroleum Resources, has also directed the incorporation of the Nigerian National Petroleum Company Limited.
Adesina explained that this is in consonance with Section 53(1) of the Petroleum Industry Act 2021, which requires the Minister of Petroleum Resources to cause for the incorporation of the NNPC Limited within six months of commencement of the Act in consultation with the Minister of Finance on the nominal shares of the Company.
He said the Group Managing Director of the NNPC, Mele Kyari, has, therefore, been directed to take necessary steps to ensure that the incorporation of the NNPC Limited is consistent with the provisions of the PIA 2021.
“Also, by the power vested in him under Section 59(2) of the PIA 2021, President Buhari has approved the appointment of the Board and Management of the NNPC Limited, with effect from the date of incorporation of the Company,” Adesina added.
Similarly, in a bid to further protect investors and deepen the capital market, the Securities and Exchange Commission has announced that it has commenced the implementation of 100% custody requirement in the Collective Investment Schemes sector.
Director General of the SEC, Lamido Yuguda, stated this in an interview in Abuja.
The custody requirement covers all funds and portfolios being managed by registered Fund/ Portfolio Managers.
Consequently, all clients’ assets managed under discretionary and non-discretionary mandates are to be held under independent Custodial agreement and Custodial Banks.
This is in addition to CIS (Mutual Funds) authorized for public offering.
Yuguda said although it is a natural operational requirement of CIS, the SEC is having some new enforcement and insistence on the compliance that has been in the books but have not been implemented before now.
He said, “For example, we have the collective business sector where you have the fund managers. We have a dichotomy between public funds, which are funds that are publicly traded, and you can see the unique values on the stock exchange and in newspapers daily. There are also private, which are investment agreements between fund managers and specific investors
“A lot of these funds in the privately held fund management mandates are in our custody. The investment manager before now did not only have the investment management responsibility for the fund, but also kept the securities and cash as whole shares in this investment. The risk is that if the investment manager should go bust, then the investor loses and that is not acceptable in financial markets around the world.
“I think with the introduction of total custody in that sector, we are likely to see a massive uptake of these kinds of products. We have released some regulations recently in this area for the different types of fund managers, and I think this is an area that is now becoming increasingly attractive to investors and is also receiving the attention of the commission.”
He said with the SEC having 100% custody agreement in the Collective Investment Schemes sector, any investor that invests in the capital market should be confident that their investments are secure, adding that it is a good thing for the market and an area that can bring about a lot of growth in the market because it offers a very good opportunity to save.
The SEC helmsman said the Commission is also looking at the market closely to see how it can bring out regulations that will help investors protect their investments.
“We have a fintech division in the commission that was set up purposely to understand these new types of investment structures and to collaborate with fintech firms that wish to register as capital market operators and offer services to the investing public. This is a developing area, and we intend to issue new regulations from time to time,” Yuguda explained.
