FMDQ Exchange temporarily suspended security admission Services in the Nigerian Commercial paper Market following new rules by the Nigerian Securities and Exchange Commission.
The Nigerian SEC last month released a new set of rules guiding the issuance of commercial papers and determining the eligibility criteria of prospective issuers of commercial papers.
FMDQ in a Jan 2 market notice to stakeholders informed them that the firm has suspended until further notice the processing of new and ongoing applications in respect of prospective Commercial Paper program registration, revisions, and Quotations.
The firm explained further that the suspension extends to applications for which the filing of all relevant documentation has been completed, applications for which the filing of all relevant documentation is yet to be completed, as well as prospective and ongoing CP offers under active CP Programmes.
The Suspension is effective from Dec 30 meaning all ongoing CP offers by prospective Issuers/Registration Members of the Exchange, are currently suspended.
FMDQ is currently in talks with the Commission on the implementation and operationalization of its New commercial paper rule. The synergy between both parties would ensure an effective and efficient transition as well as proper compliance.
New Commercial Paper rule by the SEC
The SEC’s new rule stipulates fresh conditions for CP Issuance outlining strict measures to be adhered to by exchanges.
- All proposed issuances of Commercial Papers (CPs) must first receive approval from the Commission.
- The credit rating for any CP issuance must be at least investment grade.
- The maturity date for all outstanding CP issues must fall within the validity period of the issuer’s credit rating on file with the Commission. If the rating is set to expire before the CPs mature, the issuer must secure an extended or renewed investment-grade rating at least five (5) business days before the expiration of the initial rating.
- CPs may be issued or sold to qualified institutional investors, high-net-worth individuals, and retail investors.
- For private placements, the subscription period must not exceed five (5) working days from the opening date. Any unsold portion of the issuance after this period cannot be offered further.
- In the case of a public offer, the subscription period shall not exceed ten (10) working days.
- Issuers of Non-Interest Commercial Papers (NICPs) must comply with these rules and adhere to all applicable laws, Shari’ah rulings, principles, and standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) or other standard-setting bodies recognized by the Commission.
The Nigerian SEC under Emomotimi Agama has been reeling out regulatory frameworks across various sectors ranging from the capital markets to cryptocurrency.
What to Know
- In the first ten months of the year, total turnover on the FMDQ Exchange reached ₦356.86 trillion, reflecting a 93.01% increase compared to October 2023. This data was disclosed in the FMDQ Spotlight, the in-house newsletter of the FMDQ Group released recently.
- Commercial Paper or CP” means an unsecured promissory note with a maturity of not less than 30 days and cumulatively not more than 364 days, including rollovers.
