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Have you ever thought of a place where millions of Dollars, Pounds and Naira move about for grabs between phone calls and button clicks? It’s time to think, know and get involved.



The Nigerian Capital Market


The Capital market is a place so often ignored when making investment decisions due to its seemingly technical and complicated nature. Terms like “all share index”, “bullish”, “bearish”, etc makes investors shy away. All that is actually needed to invest is just to go through any registered stockbroker of your choice, indicating precisely what you want, but to be that superior investor with a cutting edge, basic knowledge is required. As part of the basic knowledge, it is important to know:


  • The market watchdog;
  • The market structure;
  • And who to run to in the event of any dispute.





As it is in most parts of the world, the principal regulatory body of the Capital market in Nigeria is the Securities and Exchange Commission. It is a government agency mandated to regulate and develop the Capital market. It carries out its mandate by a fourfold operation of inspection, surveillance, investigation and enforcement. Non-compliance with any of the laid down rules for operating in the Capital market can make it a watchdog which can bark and/or bite.


The next important point to note is the structure of the Capital market - it operates a truly accommodative structure that ensures fair play and participation for all, regardless of whether there is huge finance or limited finance available. The structure also allows for all sorts of companies whether big, medium or small to come and raise finances.



The Nigerian Stock Market


The pivot and central operating system of the Capital market in Nigeria is the Nigerian Stock Exchange (NSE); this is where bulk of the securities are traded. At the Nigerian Stock Exchange, there is the Alternative Securities Market for emerging (small and medium) businesses with high potential for growth to acquire long term, low cost capital under less stringent rules. Apart from small and medium sized companies coming into the Alternative Securities market to float securities, it also gives the public an opportunity to trade in affordable stocks (something like penny stocks in the United States). It is likely to find stocks ranging from N5 (Five Naira) to about N70 (Seventy Naira) at unit value in this market. Next to the Alternative Securities market is the main market of the Nigerian Stock Exchange where securities of large companies are floated and traded.


The Nigerian Capital Market is also divided into two segments, the Primary market and the Secondary market. The Primary market (New Issues market) provides an avenue for companies, organisations and institutions to raise funds through the issuance of securities. This can be done either by initial public offers, private placements, right issues etc while the Secondary Market allows investors to trade in existing securities.


Perhaps, the key and most vital piece of information is where an investor should run to in the event of any dispute arising from Capital market transactions.


Section 274 of the Investment and Securities Act establishes the Investment and Securities Tribunal by providing that “there is established a body to be known as the Investments and Securities Tribunal to exercise the jurisdiction, powers and authority conferred on it by or under this Act”. The jurisdiction conferred on it by the Act can be found in section 284 (1), (2) and (3) which provide that “the tribunal shall, to the exclusion of any other court of law or body in Nigeria, exercise jurisdiction to hear and determine any question of law or dispute involving:


  1. a decision or determination of the Commission (underlining for emphasis) in the operation and application of this Act, and in particular, relating to any dispute:between capital market operators;


  • between capital market operators and their clients;
  • between an investor and a securities exchange or capital trade point or clearing and settlement agency;
  • between capital market operators and self regulatory organisation;


Sub-section 2 of section 284 also provides that “the tribunal shall also exercise jurisdiction in any other matter as may be prescribed by an act of the National Assembly.


Sub-section 3 further provides that “in the exercise of its jurisdiction the Tribunal shall have the power to interpret any law, rules and regulation as may be applicable”.


The entirety of this section rests the jurisdiction on adjudication of disputes arising from Capital market transactions on the Investments and Securities Tribunal.





There has however been a conflict of jurisdiction between the Investment and Securities Tribunal and the Federal High Court arising out of the earlier sighted provision of the Investment and Securities Act which gives the tribunal exclusive jurisdiction to hear and determine any question of law or dispute involving a decision or determination of the Commission in the operation and application of the act while the 1999 Constitution of the Federal republic of Nigeria in section 251(r) grants the Federal High Court exclusive jurisdiction on “any action or proceeding for a declaration affecting the validity of any executive or administrative action or decision by the federal government or any of its agencies” (SEC being an agency of the federal government).


This has led to a lot of confusion in different circles because of the sacrosanct nature of the Constitution and its provisions which expressly provide that “If any other law is inconsistent with the provisions of this Constitution, this Constitution shall prevail, and that other law shall to the extent of the inconsistency be void”.


There has been no judicial resolution to this conflict, particularly by the apex court of the land, but as we await such, it is more expedient to resolve investment disputes in a fast track process as the one obtainable at the tribunal. 


by Olaolu Olugbodi

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