The Securities and Exchange Commission now has a new rule, which doesn't allow the sale of the shares and securities of unlisted public firms outside the SEC-registered securities exchanges.
This new rule is one of 6 rules and regulations just approved by SEC and meant to encourage trading in the formal over-the-counter market and transparency in the capital market as a whole.
In case you didn't know, section 313(1) of the Investments and Securities Act 2007, gives SEC the power to make rules and regulations for effective regulation of the Nigerian capital market, so therefore the new rules must be complied with as it has backing of the law.
A self-regulatory firm, NASD Plc, licensed by SEC to operate an OTC market for unlisted securities, had in 2014 called for and expressed the hope that such a rule would be put in place to encourage greater transparency in the OTC market and protect investors.
And now that the new rule has been published by SEC, the NASD explained that the rule would also encourage best practice by operators in the OTC market.
It said, "We at the NASD believe this new rule will introduce new levels of transparency to the OTC market in Nigeria. It will enable best practice by operators: protection for investors: better price discovery for the market in general and a much deeper, more liquid, capital market."