The Nigerian Economy: Securities and Exchange Commission (SEC)

The Nigerian Securities and Exchange Commission (SEC) is the official regulatory body of the Nigerian capital market. The institution is supervised by the Federal Ministry of Finance.

The SEC is the main regulatory body for the Nigerian Stock Exchange (NSE), though it is privately owned and self-regulating. The SEC maintains utmost surveillance over the NSE with the mandate of ensuring that all dealing sin the Exchange are orderly and equitable, and protecting the market against insider trading.

The SEC was created as an arm of the Central Bank of Nigeria, under the ad hoc, non-statutory Capital Issues Committee established in 1962. A decade later, the committee became the Security Exchange Commission and eventually renamed it to the Securities and Exchange Commission in 1979. It was chartered with SEC Decree No. 71 but is now chartered by the Investments and Securities Act No 45 of 1999.

In 1985, a second-tier securities market was established and it saw growth and progress as a result of a government-launched program of privatization of public sector enterprises. As of 1980, the Nigerian securities market had a market capitalization of NGN4.46 billion and skyrocketed to NGN281.8 billion by the end of 1997. The once efficient market has been impacted by low personal incomes and political instability in Nigeria, which has contributed to deterring foreign direct investments.

In the early and mid-2000s, the Central Bank of Nigeria established reforms that slashed the number of banks in Nigeria, but led to the increase of the CBN’s size. This factor, amid others led to a surge in equity market capitalization on the Exchange, reaching a peak of USD100 billion, over 60 percent of that which was owned by the banks, in March 2008.