The NASD OTC Exchange has urged public limited companies (PLCs) to strictly adhere to the Securities and Exchange Commission (SEC) regulation mandating that trading of unlisted public companies’ securities occurs solely on SEC-registered Over-the-Counter (OTC) Exchanges.
Key SEC Regulations
According to SEC rules, all transactions involving unlisted securities—buying, selling, or transferring—must take place through an approved OTC platform. This measure aims to ensure transparency and compliance with the Investment and Securities Act (ISA). Violations attract a minimum fine of ₦100,000 for initial infractions, increasing daily by ₦5,000 for prolonged non-compliance.
NASD’s Statement
The NASD expressed concern over non-compliance by several unlisted public companies, stressing that this impedes SEC’s ability to monitor transactions, which is critical for safeguarding investor interests.
“If enforced, the rule will make unlisted public companies’ securities more accessible to investors and enhance share liquidity. It will reduce fraudulent transactions, minimize underhand dealings, and boost investor confidence in the capital market,” NASD stated.
Benefits of SEC-Registered Platforms
Trading on SEC-registered platforms offers several advantages:
- Transparency: Transactions occur under a regulated system, reducing fraud risks.
- Liquidity: Easier access to securities ensures better price discovery through market forces.
- Diversification: Investors can seamlessly diversify their portfolios by accessing equities from various sectors.
NASD emphasized that adherence to these rules would align with the SEC’s goal of fostering a secure and efficient capital market while enhancing trust among investors.
The Exchange called on stakeholders to recognize the critical role of regulated OTC platforms in promoting a fair and robust securities trading ecosystem.
