July 22nd, 2014 /NSE
These rules are made pursuant to Article 15 of the Rules and Regulations Governing Dealing
Members (the Rules) and Section 6 of Policy No.01 NSE; and derive their force there from.
Article 15 of the Rules, as well as global best practice, requires that financial institutions adopt and implement robust compliance programs as part of good corporate governance practice, and appoint competent compliance officers to oversee their compliance. Compliance officers have an important role to play in the implementation and enforcement of capital market operators’ compliance programs.
They are required to ensure that internal processes and procedures are followed, ensure strict adherence to industry guidelines, external regulatory framework as well as policies set out by law.
The Compliance Officer is required to report breaches and violations to the appropriate regulatory authorities. He acts as an internal advisor and carries out monitoring of the various business units to ensure that the firm’s activities conform to regulatory requirements.
The Compliance Officer serves as an important contact point between Dealing Member Firms and the Regulator(s), handling and responding to various regulatory enquiries, conducting monitoring assessments, etc.
Given the importance of the Compliance function, it is crucial that the regulator(s) as well as senior management of Dealing Member Firms of the Nigerian Stock Exchange (“Dealing Member(s)” or “Dealing Member Firm(s)”) sufficiently empower Compliance Officers and prescribe ways of ensuring that they are adequately protected to effectively carry out their duties.
a. The Exchange in setting out these rules seeks to ensure that the requisite requirements are in place for:
i. Appointment of Compliance Officers;
ii. Defining their scope of roles, responsibilities and obligations; and
iii. Securing the protection of the Compliance Officer.
b. These rules lay down the framework within which the Compliance Officers of Dealing
Member Firms shall operate; and outline the basic responsibilities of the compliance function by:
i. Providing clarity to enable Compliance Officers carry out their duties effectively and efficiently.
ii. Highlighting the importance of the Compliance Officer in an organization and distinguishing the independence of their role from that of any other role in the firm.
APPOINTMENT OF COMPLIANCE OFFICERS:
Persons to be appointed as Compliance Officers in a Dealing Member Firm shall meet the following qualification requirements:
i A minimum educational qualification of a university degree or a higher national diploma from a recognized tertiary institution, or professional qualification in the field of Law,
Accounting, Actuarial Science, Auditing, Finance, Economics or any other relevant discipline;
ii. A minimum of 4 years’ experience in the capital market with proven understanding of the operations of the capital market and relevant regulatory requirements;
iii. Proficiency in the use of I.T. and desktop automated tools and programs;
iv. Satisfactory completion of The Exchange’s mandatory Compliance Officers’ training program;
v. The individual shall pass the ‘Fit and Proper’ evaluation as prescribed by The Exchange from time to time. When determining fitness and propriety, The Exchange will take into consideration, among other things, the individual’s competency to carry out the Compliance function, his character and integrity. The Exchange has the discretion to object to the appointment of any person as a Compliance officer.
3a. Chief Compliance Officer:
The Exchange recognizes the variety of compliance departmental structures that exist, e.g. the sole compliance officer operating in a flat structure and the complex hierarchical structure where several compliance officers report to a Chief Compliance Officer.
Regardless of the internal structure the Compliance Officer finds himself in, The Exchange accords full and total recognition to whomsoever the Dealing Member Firm chooses to register with The Exchange as its Compliance Officer. It is mandatory for all
Dealing Member Firms to register a compliance officer with their Regulator. The individual registered as Compliance Officer will be treated, for all intents and purposes, as the ‘Chief Compliance Officer’ of that Dealing Member Firm.
It is necessary to note as follows:
i. To qualify for appointment as Chief Compliance Officer of Dealing Member, a
Compliance Officer shall have either:
a. Undertaken and completed relevant courses recognized and certified by The
b. Undertaken and completed the relevant courses under the Compliance Officers
Training Program of The Exchange.
ii. The Chief Compliance Officer shall not be below the rank of a Head of Department. His role should not be combined with any other role or function within the Dealing Member Firm. The Chief Compliance Officer shall remain independent and neutral at all times to safeguard against the possibility of a conflict of interest.
iii. The Exchange shall not permit the fusion of any role and/or function within the organization with that of the Compliance Officer to prevent any potential of conflict of interest. Neither should the Compliance Officer be assigned any competing assignments.
iv. Notwithstanding the above, the office of a Chief Compliance Officer may only be combined with the roles of a Company Secretary or Legal Adviser or Head of Legal, provided that the Company Secretary or Legal Adviser or Head of Legal shall be a person that has the requisite knowledge and experience of capital market operations and has undergone the relevant training as prescribed by The Exchange.
v. The process for the appointment and removal of a Chief Compliance Officer shall be approved by the Board of Directors of the Dealing Member firm.