What is NASD Plc?
NASD Plc is a Securities Exchange registered by the Securities and Exchange Commission [“SEC”] to operate a formal Over-The-Counter [“OTC”] market in Nigeria. The acronym NASD was derived from the company’s origin -the "National Association of Securities Dealers".

 

What service does NASD Plc. Provide?
NASD Plc. provides trading platforms where all instruments not listed on a traditional exchange, registered by the Securities and Exchange Commission, can be traded through licensed stockbroking houses. It also provides: - a regulated marketplace for OTC transactions; - an avenue for shareholders to trade shares of unlisted public companies; - a centralised source of information and price discovery on unlisted public companies.

 

What is the ownership structure of NASD?
NASD is currently owned by fifty-nine (59) capital market operators in Nigeria and has an authorised Share Capital of N500 Million. Being a public company however, the shares are freely transferable to any interested investor and may be bought on the OTC market when available.

What is the NASD OTC platform?
The NASD OTC platform is an electronic inter-dealer quotation system that displays historical price data, current price quotes, and market depth information on all long term securities registered by the Securities and Exchange Commission but not listed on any other exchange in Nigeria. The platform provides an avenue for securities to be traded without the issuer being listed thereby providing more transparency and ultimately liquidity to the shareholder and the capital market in general.

 

NASD facilitates internet trading, what security is in place to protect the integrity of the deals?
NASD platform has encrypted login access, security certificates, clustering and replication of environment for continuous market availability.

 

Who regulates the NASD OTC market?
The NASD Securities Exchange is regulated by the Commission and it is also a Self-Regulatory Organization [“SRO”].

 

Who are the operators in the NASD OTC market?
» Broker/Dealers registered with NASD introduce securities and make market (either buy or sell).

» Accredited Issuing Houses are licensed with NASD to provide financial and Investment advice to Issuers about participating on the OTC market.

» 6 Settlement banks act on behalf of the Broker/ Dealers to ensure that all deals are settled and paid for on the appropriate transaction date.

» Central Securities Clearing System [“CSCS”] is the central depository for NASD OTC market and ensures completion of delivery of transactions A list of all participants is available on our website

 

What are the official trading hours on the NASD OTC market?
Trades can be executed on NASD OTC market between the hours of 9.30 a.m. and 3.30 p.m. on weekdays (with the exception of public holidays)

 

What rules guiding transaction on NASD OTC market?
The rules and regulations of the NASD OTC market are designed to protect investors, regulate the activities of Participating Institutions and create an orderly environment for efficient trading of unquoted securities. The full rules of the market can be obtained from our website at this link

 

What are the benefits of participating in the NASD OTC market?

» Transparency in trade which enhances investors’ confidence

» A centralized platform for price discovery

» A source of long-term funding for companies

» Access to broad range of asset classes » Access to specialized market data

» Innovation of new and unique investment solutions

» Increased corporate visibility which brings economies and savings.

» Improved investor / Shareholder relations

 

How will NASD monitor trade activity on the OTC market?
NASD's administrative control facility carries out surveillance on market activities. Trader activity is actively monitored both on and off the trading platform.

 

Are there penalties for defaulting participating institutions?
The integrity of the market is critical to the continued growth of OTC market in Nigeria. Defaulters will face sanctions, fines and/or suspension from trading as may be imposed by the NASD Disciplinary Committee.

 

How are trade disputes settled by NASD?
NASD has established a Disciplinary Committee to handle disputes on the market and have put in place rules and regulations guiding market activity. Investors can submit complaints or report any market infraction directly to NASD or via email to whistleblowing@nasdng.com. The Disciplinary Committee shall investigate the complaints, give both sides an opportunity to be heard and make a decision on the issue.

 

What is the difference between transfer and trading?
Transfer and trading refers to the same thing, the two words both mean change of ownership of a share certificate.

What securities are tradable on NASD OTC market?
All unlisted securities of public companies registered with Securities and Exchange Commission are tradable on NASD OTC Market.

 

What is a public unlisted equity?
A public unlisted stock is a unit of share of a public limited company [“Plc”] that is not quoted on the board of any registered exchange in Nigeria. It is often referred to as share.

 

What if the security of a public company is not registered with Security and Exchange Commission?
Section 54 (1) of the Investment and Securities Act states that "All securities of public companies and all Investments of a collective investment scheme shall be registered with the Commission under the terms and conditions contained herein". Accordingly, NASD will not trade the securities of public companies that are not registered with the Commission. Such securities contravene investment laws, attract penalties and may expose the investor to undue risk. The issuer of such securities should immediately register the securities with the Commission. Once the Commission has registered the securities, they can then be traded on the NASD OTC market.

 

Can securities listed on other exchanges be traded on NASD OTC market?
Equities listed on any registered exchange in Nigeria will not be traded on NASD.

 

What happens when a security that was trading on the OTC market gets listed on another exchange?
By default all securities of public companies not quoted on another exchange qualify to be traded on the NASD OTC market. Once a security has been approved for listing on another exchange, that exchange will inform NASD in writing that the security in question is about to be listed. Upon receipt of this written notification, NASD will stop trading in that security and remove it from the NASD platform.

 

Where can I get a list of all the traded securities on NASD OTC market?
A comprehensive list of all the securities trading on the NASD OTC market is available on our website under the menu "Market > Securities Trading" Section. How do I get financial records of companies that are trading on NASD OTC market? Where such information is available online, NASD will provide a direct link to the financial accounts and statements on the issuer's website.

How Are Prices Of Securities Determined On The NASD OTC Market?
Prices are determined by demand and supply. Investors are advised to select Brokers who can analyse the company's financials and advise on appropriate bid and offer values for securities of interest. Where bids exceed offers, the price of the security may rise and where offers exceed bids, the price may be expected to fall to a level where a deal may be struck.

 

How will trade on NASD OTC market be settled?
All trades will be settled through Central Securities Clearing System [“CSCS”] on T+3 basis (that is, Transaction date plus three days).

 

Where can I get the Pricelist of securities trading on NASD OTC market?
You can get the Pricelist of securities trading on NASD OTC market from our website under the heading “Daily Market Summary”. View price list here

 

How can I buy or sell unlisted securities on NASD OTC market?
To buy or sell shares on NASD OTC market, potential investors should contact one of our licensed stockbrokers. Our Stockbroker list has being categorized into two namely Broker/Dealer Firms and Broker Firms and a comprehensive list is available here. Stockbrokers will also be happy to provide you with other available information on unlisted shares.

 

Will price movements be restricted to a daily percentage on stocks?
Yes. NASD operates a 15% +/- price bands as prices will be determined solely by the forces of demand and supply.

 

How can investors monitor price movements on NASD OTC Market?
Price movements are documented in the market index. Daily movements are also available on the market ticker on our website. The Daily Market summary allows the public see volumes traded and the deal prices.

 

Does NASD act as a central counter party?
No, NASD is an organised market that provides a platform where all unquoted securities can be traded between sellers and buyers on behalf of the investors. All trades on the platform are executed by NASD licensed Participating Institutions.

 

Does NASD invest directly in instruments traded on its platform?
No. NASD Plc is a neutral operator in the financial markets. It only provides platforms for trades to be established.

 

Is there a free float requirment on the NASD OTC market?
There is a 10% free float requirement for admitted companies. No such requirement exists for companies whose securities are merely admitted to trade.

 

How does NASD reflect corporate actions on securities that are trading on the OTC market?
As soon as NASD becomes aware of the information, it will announce the corporate actions of securities trading on the OTC Market on the website. As an OTC market, we do not intervene in valuation and pricing but shall make all information necessary for appropriate pricing available to the public.

 

Can securities traded on NASD OTC platform be used as collateral?
Yes. Lenders will be pleased to learn that OTC trading stocks qualify for lien arrangements. NASD provides universally acceptable prices as a reference while the CSCS will hold dematerialised shares according to the terms of the borrower / lender agreement. For a full list of NASD OTC licensed stockbrokers who can structure your lien arrangement please navigate to: Market > Participating Institution > Broker/Dealer Firms on our website.

How can I verify my share certificate?
i. You will instruct a licensed Stockbroker to verify his signature and open a depository account at CSCS.

ii. The stockbroker will attach the certificate with a duly signed transfer form and send to the Company’s Registrar for verification.

iii. The Registrar will verify the signature securing the certificate and confirm the investors holding. Once verified, the registrar will send a book entry of the investors holding to the depository account held in CSCS iv. CSCS will credit the Investor’s account with units of shares verified and the broker can offer to sell the amount credited at the start of the next trading day.

 

What is dematerialization?
This is a process in which physical share certificates are converted into electronic format and domiciled with a registered depository. CSCS is currently the only company that provides depository services to the Nigerian capital market. Share certificates must be converted into electronic form before they can be traded on the NASD OTC market.

 

Do I need to open a seperate CSCS account for NASD OTC market?
Yes, you need to open a CSCS account for transactions on NASD OTC Market. Simply contact your Stockbroker and a new account will be opened on your behalf with CSCS.

 

To whom do I take my share certificates for dematerialisation?
Take your share certificates to a stockbroker who will present them for verification and subsequent dematerialisation.

 

Why do I need to sign in two places on the NASD transfer form?
You need to sign in the two places to cover both verification and dematerialisation of the certificate into your CSCS account.

 

If I have not received my share certificate from the issuer what should I do?
Your Stockbroker should contact the Registrar and obtain your certificate for you.

 

Can investors still obtain a certificate if so desired?
Yes. Although the dematerialisation process is set up to provide greater security and easy access, Investors may approach the Registrars and request for a physical certificate. Instruments Tradable

How can securities be introduced to NASD OTC market?
Securities can be introduced either by the company itself or by individuals who choose to sell their holdings on the market. Where the securities are introduced by the Company, the board of the company must sign undertakings to comply with market rules and provide any information as may be reasonably required by NASD. This is known as ("Admitted Company"). Where the security is introduced by investors who wish to carry out trades. Such introduction is called ("Admission to Trade"). This is done through a NASD licensed Stockbroker and the company does not have any obligation to provide NASD with information.

 

What are securities?
Securities are financing or investment instruments that are bought and sold in the financial markets, such as equity, bonds, notes, options, collective investment schemes, mutual funds, Real Estate Investment Trusts (REITS).

 

What is equity?
Equity is a stock or any other securities representing an ownership interest in a company. These are usually broken down into units with nominal values attached.

 

What is bond?
A Bond is an instrument of indebtedness of the bond issuer to the holders. It is a debt security, under which the issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay them interest (the coupon) and/or to repay the principal at a later date, termed the maturity.

 

What are Collective Investment Scheme [“CIS”]?
Collective Investment Scheme is a way of investing money alongside other investors in order to benefit from the inherent advantages of working as part of a group. This allows for sharing of risks and returns for the underlying investments of the scheme.

 

What are derivatives?
Derivatives are financial instruments which derives its value from the underlying entities such as asset, index or interest rate. It has no intrinsic value in itself.

 

What are mutual funds? A Mutual Fund is a type of professionally managed collective investment vehicle that pools money from many investors to purchase securities. It could be on an "open-ended," meaning investors can buy or sell shares of the fund at any time or close ended.

 

What are Real Estate Investment Trust Scheme(REITS)?
REITS is a vehicle that invests in the ownership and management of a pool of real estate assets and mortgages, and packages them as tradable securities into which individual investors can subscribe.

 

How does NASD trade "linked notes and other derivatives?
The securities of linked notes will go through the same process of dematerialisation and admission to trade on NASD OTC market as regular equities. Any modifications to the process will be communicated to the client ahead of the trade.

How long does it take to admit a Security to trade on NASD OTC market?
Between two and four weeks (subject to compliance with the Rules).

 

What are the admission requirements for companies?
The requirements for admitting a company on the NASD OTC market is available on our website here. Companies are placed into one of two categories, the Blue tier and the Pink tier depending on the level of disclosure which a company is willing to provide to the market. Companies that are backed by high levels of corporate governance and current audited financial statements are placed in the Blue category while companies with low levels of governance are placed in the pink category.

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