capital market
SEC exposes new rule on Shariah Advisory Services
The Securities and Exchange Commission has exposed new rules on Shariah Advisory Services for non-interest capital market products and services.
According to the SEC, Shariah governance is crucial considering that compliance with Shariah rules and principles is important in Non-interest Capital Market operations/transactions.
“The provision of the rules is in line with local and international best practices. The regulatory organization in the Nigerian Financial System such as CBN, NAICOM had issued such guidelines to provide clear and good Shariah governance in their respective sectors.
“Making the Shariah Advisory service a registrable function in the market will assist in effective implementation of the proposed consolidation of the Shariah governance rules and will also be an additional source of revenue to the Commission,” the Commission stated.
The Commission stated that the Non-interest Capital Market activities in recent times are exponentially increasing as the market is witnessing the entrance of more asset managers, emergence of i-REIT, listing of sovereign Sukuk on the Exchanges, issuance of corporate Sukuk, emergence of shariah advisory function etc.
“These developments coupled with the necessity of shariah services for the market affirms the critical need for a framework/guideline to set a minimum standard for persons (corporate or individual) seeking to provide shariah advisory services for Non-Interest Capital Market activities.
“The guideline is essential for the development of this nascent sector, as it will promote transparency and confidence, whilst creating a level playing field for all participants in the market.
“Further to the above, the Commission stated that a review exercise on the its existing Rules on shariah governance undertaken by the Standing Committee of Deepening Non-interest Capital Market led to the recommendation that rules be drafted to provide for the registration and regulation of shariah advisory services in line with international best practices. Hence, the proposed Rules for Shariah Advisory Services for Non-Interest Capital Market Products and Services.
“Going by the Rule, an issuer or fund manager with the consent of the trustee (where applicable) shall appoint a Shariah Adviser to provide Shariah Advisory services for Shariah products, issuances and schemes.
“A capital market operator seeking to provide Shariah compliant products and services shall appoint a registered Shariah Adviser for the firm and notify the Commission of such appointment within five (5) business days of the appointment.
“The rule stipulates that the SEC may register a Shariah Adviser or renew the registration of a registered Shariah Adviser subject to the applicant satisfying some criteria.
“An individual eligible to provide Shariah Advisory services under these rules shall satisfy the following requirements: Possession of a minimum of a Bachelor’s degree in Shariah, which includes study in Usul Fiqh (principles of Islamic jurisprudence) or Fiqh Muamalat (Islamic transaction/commercial law) or a person with vast knowledge in Usul Fiqh (principles of Islamic jurisprudence) or FiqhMuamalat (Islamic transaction/commercial law) acquired through Islamic system of education: Ability to read and write in Arabic and English Language respectively and Possession of basic knowledge of business or finance particularly in Islamic finance and capital market.
“On experience, the applicant is expected to: Have at least two years of relevant experience in Islamic finance; or have at least one year of relevant experience in Islamic finance and have attended at least five relevant Islamic finance courses/workshops.
“The Rule also states that the roles and responsibilities of a Shariah adviser shall include: Advising on all aspects of the Non-Interest Capital Market Products and Services including documentation and structuring;
“Issuing Shariah certification which outlines the basis and rationale of the structure and mechanism, the applicable Shariah principles used and relevant Shariah matters relating to the documentation of the Non-Interest Capital Market Products and Services; Providing Shariah expertise/guidance on all matters, particularly on investment instruments and Reviewing compliance reports of the Shariah product’s proceeds utilization (where applicable) to ensure that investment activities are Shariah compliant.
“Other roles and responsibilities are: Providing a periodic report to the trustees certifying whether Sukuk proceeds, Islamic fund or any other Non-Interest Capital Market products have been managed/administered in accordance with Shariah principles and rules; Ensuring that the applicable Shariah principles and any relevant resolutions and rulings endorsed are complied with; Applying ijtihad (where applicable) to ensure all aspects of the Non-Interest Capital Market products comply with Shariah principles; and accountability for the quality, accuracy and soundness of his own decision or advice.
“The Rule also places some restrictions as a Shariah adviser cannot accept any appointment in more than one registered Islamic Fund Management Company/Fund Management company offering Islamic products provided that the Shariah Adviser could serve in multiple Fund Management Companies with the consent of the Fund Managers, Trustees, and prior approval of the SEC.
“Also, a Shariah Adviser shall immediately disclose to the Commission, Issuing House or Fund Manager any circumstances that may affect his ability to meet any of the requirements of the rule.
“Registered Shariah Advisers shall be exempted from appointing compliance officers as required under the Commission’s Rules and Regulation on Appointment of Compliance Officers.”
The Federal Government has listed its April 2024 Savings Bonds worth N4.214 billion on the Nigerian Exchange Limited platform.
This was disclosed in the market bulletin signed by Godstime Iwenekhai, Head, Issuers Regulation Department of NGX.
According to the bulletin, “Trading License Holders are hereby notified that the April 2024 Issue of the Federal Government of Nigeria (FGN) Savings Bonds was listed on Nigerian Exchange Limited (NGX) on May 13, 2024.”
Details of the Bonds include FGS April 2026, 1.228 million units valued at N1.228 billion at a coupon rate of 17.046 percent, while FGS April 2027, 2.986 million units amounted to N2.986 billion at a coupon rate of 18.046 percent.
The bonds are backed by the full faith and credit of the Federal Government of Nigeria and charged upon the general assets of Nigeria, according to the debt office.
FGN Savings Bond is issued monthly in tenors of two and three years with quarterly payment of coupons (interest) at a rate predetermined and published by the DMO every month.
The retail savings bond product was introduced by the Debt Management Office (DMO) on behalf of the Federal Government in 2017 to democratise its activities in the bond market by making it easily accessible to Nigerians to ensure continuous development of the domestic market and bridge infrastructure deficit which has been a constraint to economic growth.
As part of its capacity building functions, Lagos Commodities and Futures Exchange (LCFE), has onboarded and inducted another 23 Commodities Brokers, the fourth edition in the series, to increase the number of professionals to specialise in various asset classes in the Nigerian commodities ecosystem.
On the list of those inducted last week were the Managing Director, Dynamic Portfolio Limited, Mr Remi Lasaki and many Chief Executive Officers of stockbroking companies in Nigeria.
In his welcome address, LCFE’s Managing Director and Chief Executive Officer, Mr Akin Akeredolu-Ale, urged the inductees join hands with The Exchange to build a virile commodities market that shall be beneficial to all.
“LCFE is working hard to build a market that will benefit the entire Capital Market and its brokers. Each broker can select a commodity and dedicate their focus on it, thereby enhancing your company’s wealth, your individual skill set and contributing to the growth of the Nigerian Economy.
“Together, let us seize this opportunity to build a vibrant and dynamic marketplace that unlocks new possibilities for investors, enhances economic prosperity, and positions Nigeria as a leader in commodities trading.
“The Exchange is actively engaging with the Securities and Exchange Commission to obtain approval for more products like Lithium, diamond and Oil and Gas commodities. Just yesterday, we signed an MOU with a Global Certification Agent Bureau Veritas to certify lithium and other Solid Mineral commodities to be traded on LCFE. Additionally, we have made significant strides in the Cashew ecosystem, signing an MOU with the Cashew Association of Nigeria (CAN), aggregators, and a major cashew processor.
“Eko Gold also represents a pioneering investment opportunity within our commodities ecosystem, leveraging stability and transparency to diversify options, attract capital, and create value across the value chain. LCFE is fully committed to supporting its growth and providing brokers with the tools and guidance needed for effective promotion of the asset classes,” said Akeredolu-Ale.
Corroborating him, the Chairman, Securities Dealing Houses of Nigeria (ASHON), Mr Sam Onukwue, noted LCFE was established for total transformation of commodities exchanges in Nigeria and boost the country’s Gross Domestic Product (GDP).
“The underpinning drive for establishing the exchange was the need to transform and reposition the commodities market and harness opportunities in the commodities ecosystem. This drive will enhance and crate value for all stakeholders in the ecosystem,” he said.
The newly elected President of Chartered Institute of Stockbrokers (CIS), Mr Oluropo Dada, congratulated the inductees and advised them to uphold the ethical standard of the profession and operate with skills and integrity.
Akeredolu-Ale also congratulated the new board and management of Securities and Exchange Commission (SEC), under the new Director General, Dr Emomotimi Agada.
In July last year, the Pan African Exchange inducted 33 commodities brokers, including the first female office holder at Chartered Institute of Stockbrokers (CIS), Mrs Fiona Ahimie.
President Bola Tinubu has asked the Senate to screen and confirm four persons appointed as board members of the Securities and Exchange Commission (SEC), the apex regulator of Nigeria’s Capital Market.
The President’s request was contained in a letter read by the Senate President, Godswill Akpabio during the plenary on Wednesday.
The appointed members of the SEC are Emomotimi Agama, Frana Chukwuogor, Bola Ajomale and Samiya Hassan-Usman.
While Agama was appointed as Director-General, Mr Chukwuogor will serve as Executive Commissioner (Legal and Enforcement) of the Security and Exchange Commission. Ajomale was appointed as Executive Commissioner (Operations) while Hassan-Usman was appointed as Executive Commissioner (Corporate Services).
In April, President Tinubu approved the appointment of seven persons as members of the SEC pending their confirmations by the Senate. But, only four names were transmitted to the Senate for confirmation and Tinubu did not give reasons for not including the names of the other three professionals.
In the letter, the President explained that the appointment complied with the provisions of section (1) of the Investment and Security Act of 2007.
“Confirmation of appointment of the Director-General and Commissioners of the Securities and Exchange Commission.
“By the provision of sections 3 and 5 (1) of theInvestment and Securities Act 2007. I am pleased to present for confirmation by the Senate the under-listed four nominees as Director-General and Commissioners of Securities and Exchange Commission,” he said.
The president urged the lawmakers to expedite the screening and confirmation process.
The Senate President thereafter referred the request to the Senate Committee on Capital Markets to report back to the Senate within two weeks.
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