NSE Implements Rules to End Illegal Shares Sale

The Nigerian Stock Exchange, NSE, has kicked off the implementation of newly amended rules aimed at curbing the unauthorized sale and transfer of shares by unscrupulous stockbroking firms and traders.

The Exchange had last week started the implementation of a detailed and tougher rule on fraudulent sale of shares.

The rule had been approved by the Securities and Exchange Commission (SEC) but the NSE delayed the implementation.

Under the amended rules, the Exchange could withdraw the dealing licence of any erring stockbroking firm and trader as well as impose fines not less than N1 million on any offender.

A source at the weekend said the implementation of the new rule was part of efforts by the Exchange to reinforce its market-protection mechanism and ensure that operating rules are effective to serve as deterrents to market abuse.

According to the rule, no dealing member shall sell or transfer any securities without the authorization of the owner.

“A dealing member that has sold or transferred any securities without the authorization of the owner shall not be permitted to keep any benefits accruing from such transaction, including but not limited to bonuses, rights, commissions, cash dividends, capital appreciation, and any profit accruing therefrom whatsoever,” the rule stated.

Any dealing member that sells or transfers securities without the authorization of the owner shall be required to buy back the securities along with any accrued benefits within 14 business days.