A Broker's Understanding of the CISIM Bill

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Friday, October 16, 2020 / 04:07PM / By David Adonri / Header Image Credit: Nigeria Business Directory


Proshare Nigeria Pvt. Ltd.


For the benefit of those not familiar with the Chartered Institute of Securities and Investment Management (CISIM) bill as proposed by the Chartered Institute of Stockbrokers (CIS) to the National Assembly; it is an amendment to replace the Chartered Institute of Stockbrokers (CIS) Act 105 of 1992  with a new act that would ensure uniform capacity building for core individual professionals that deal in securities.

 

Currently, the current Act, CIS is the sole authority in the Capital Market with the power to train and certify stockbrokers. It also ensures that its members adhere to the tenets of the highest ethical standard.

 

CIS and Its Proposed Reimaging

 

To align fully with this mandate, CIS initially proposed an amendment to its law under the name "Chartered Institute of Securities and Investments (CISI)". Within a short period, the Bill passed First Reading at the National Assembly. But upon discovering that another foreign Institute bears the same name, CIS decided to change its own to CISIM, an upgraded version of CISI Bill. CIS trains and certify practitioners to be highly competent and versatile in financial advisory, and commodity trading, investment banking, trustees and fund management.

 

CIS training is academically and technically all-encompassing. It is spiced with exposure of students to a practical demonstration of teachings at security exchanges. Training of members by CIS through the Continuous Professional Development (CPD) program is a lifelong exercise to update their skills. As a result of their distinctive competencies, CIS members continue to excel at home and abroad. Under their core competencies and legal empowerment, CIS members are core professionals who drive Capital Market business in Nigeria. Contrary to misconceptions, CIS is an independent legal entity established by the law of the Federal Republic of Nigeria.

 

It is necessary to stress that the proposed amendment will not by any guise empower CIS to usurp the regulatory powers of the Securities and Exchange Commission (SEC) and Central Bank of Nigeria (CBN). These regulators have their clearly defined areas of authority that encompass all market activities.

 

CIS is the only legally constituted Securities and Investments Institute in Nigeria that certifies practitioners. The other professionals like Solicitors and Reporting Accountants are not core Capital Market practitioners but function as ancillary professionals. They are not covered by the proposed CISIM Bill.

 

The Capital Market is organized in an orderly manner. All ancillary service providers such as Rating Agencies, Solicitors, Reporting Accountants etc are not covered by CISI Bill as they are registered by SEC. The efforts spearheaded by CIS members, in combination with other stakeholders enabled Nigeria's Capital Market to progress over the years.  CISIM aims at sustaining this progress by strengthening the bonds of oneness and consolidate scattered practices into a formidable virile entity.

 

The Bill seeks to bring all core professionals in the financial market under one umbrella for synergy. This will put an end to the mushrooming of practices and low level of advocacy by Market Operators. Coming together will create a further avenue for versatility and specialization.

 

CIS: Avoiding A Regulatory Twist

 

CISIM Bill will provide holistic certification for individual professionals in the securities market, while the organizations of each professional will take care of regulatory roles. By this, there is no conflict of roles. It is a division of labour between capacity building and regulation. This has been aptly demonstrated by the Institute itself. While it certifies stockbrokers through examination processes and enforces their compliance with ethical standards, stockbroking houses are regulated by SEC and The NSE. The same shall apply to all individual core professionals under the new regime of CISIM. This proposal is not peculiar to Nigeria. Every professional in the securities market in the United States of America must pass some Examinations conducted by Financial Industry Regulatory Agency (FINRA), especially, at the minimum, member of any professional body must pass Series 7 to obtain a license for eligibility to trade in many securities and Series 65 for additional trading opportunities. CISIM is part of the reforms in the capital market to hedge it against all sorts of vagaries and restore investor confidence.

 

However, these alone will not guarantee its safety, liquidity and profitability except that issues of skills and competencies are addressed. This underscores the repositioning which CISIM seeks to reinforce.

 

There is cross-certification between CIS and international professional bodies that enables members to practise in their respective jurisdictions, after fulfilling certain conditions. In line with international best practices, every country allows holders of foreign professional qualifications to practice only after the domestication of their certification by a local certification authority.

 

For instance, as a foreign-trained Pharmacist or Medical Doctor, you cannot practice in Nigeria until certified by the Pharmacists Council or Medical Council. This is a global standard to which Nigeria subscribes to. The CFA Society just like other foreign Finance Institutes which includes CISI and New York Finance Institute are not certification authorities in Nigeria. The core competence of its holders is Financial analysis which is one of the core mandates of Stockbrokers according to the Act that establishes the Institute. On the promotion of the rights of shareholders,  stockbrokers are heavily involved under the Investor Education Programme.

 

It is noteworthy that apart from the Institute, other groups that have signed a Memorandum of Understanding (MOU) for the establishment of CISIM are: the Association of Investment Advisers and Portfolio Managers (AIPM), the Fund Managers Association of Nigeria (FMAN) and the Association of Issuing Houses of Nigeria (AIHN).

 

The prompt passage of the Bill when re-presented under the new acronym, CISIM is the right step that will hasten vital reforms that are long overdue in the Capital Market.



 Proshare Nigeria Pvt. Ltd.


About the Author

David Adonri is a Chartered Stockbroker and the CEO, Highcap Securities Limited. He can be reached vide dadonri@yahoo.com


Proshare Nigeria Pvt. Ltd.

 

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8.     Chartered Institute of Stockbrokers Elects New President and Governing Council Members - Proshare, May 20, 2020

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10.  CISI Bill 2013: NSE Presents Memo to Senate  - InvestorAdvocate, Oct 02, 2013

11.   PDF - The Chartered Institute of Securities and Investment Bill 2020

12.  PDF - The INVESTMENTS and SECURITIES ACT (ISA) 2007 - and Updates

13.  PDF - The Chartered Institute of Stockbrokers (Amendment) Act 2016

14.  PDF - The Chartered Institute of Stockbrokers Act Cap 29 2004

15.  The Securities and Exchange Commission (SEC) Nigeria

16.  The Nigerian Stock Exchange

17.  The FMDQ Securities Exchange Limited

18.  The National Association of Securities Dealers (NASD) OTC Securities Exchange Ltd

19.  The AFEX Commodities Exchange

20. The Lagos Commodities and Futures Exchange

21.  The Chartered Institute of Stockbrokers of Nigeria (CIS)

22. The Chartered Institute for Securities & Investment (CISI)

23. The U.S. Securities and Exchange Commission

24. Financial Industry Regulatory Authority (FINRA), USA

25. The Financial Conduct Authority UK

26. The Prudential Regulation Authority UK

27. Guide to financial protection in the UK

28. Breaking down which types of firms are considered "sell side" and which are "buy side"

 

 Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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