With effect from January 1, 2022, the Securities and Exchange Commission (SEC) will begin imposing regulatory fees on fixed income secondary market transactions. This was disclosed in a recently released document titled “Circular on the commencement of regulation on a fixed income (bonds) secondary market transactions.”
This circular is issued following Section 13(u) of the Investments and Securities Act (ISA), 2007 and Schedule 1, Part D of the Securities and Exchange Commission Rules (Registration Fees, Minimum Capital Requirements, Securities, and Other Matters).
This section empowers the Securities and Exchange Commission (SEC) to levy fees on transactions relating to the investment and securities business in Nigeria, among other things.
Key takeaways
SEC notified Capital Market Operators (CMOs) and stakeholders generally on the following:
- A regulatory fee structure on secondary market transactions on Bonds will take effect from January 1, 2022.
- Secondary market transactions on Bonds shall include bond transactions executed on a Securities Exchange (Exchange), reported by voice or by any other means to an Exchange as having been transacted thereon or of which the information of the transaction details are featured on the Exchange’s platform for purposes including but not limited to onward transmission to a Depository for settlement, price discovery and corporate disclosure.
- By this fee structure, the SEC will charge 0.025% of the total value of all secondary market transactions on Bonds, while the Securities Exchange on which the transaction occurs will charge an amount not exceeding 0.025% of the total value of secondary market transactions on Bonds.
- Bond transactions by Dealing Members will attract a single regulatory fee of 0.0001% of the total value of the secondary market transactions on Bonds and are exempt from the 0.025% fee charge earlier stated.
The FMDQ alone handled over N15.2 trillion in transactions in November. When multiplied by 0.025%, you get N3.7 billion every month, which is a lucrative source of revenue for Nigeria’s Securities and Exchange Commission.