1What 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.
2What are the modes of Admission on the NASD and Categories of company admitted on NASD?
All instruments of Public Unlisted Companies are accommodated on the OTC Market via any of the two modes of admission on NASD. The modes of admission on NASD are:
• Security Admission.
This process is Investor-led. Shareholders of a Public Unlisted Company {“Issuer/Company”] whose shares are not listed on any other Exchange and wish to trade their shareholding shall appoint a Participating Institution i.e. Broker/Dealer to introduce the securities to NASD. This mode of admission does not require active participation of the Issuer. A partial dematerialization of the Company’s register with CSCS i.e. the Investor’s shareholding shall be dematerialized into CSCS is required.
• Company Admission.
This process is Issuer-led, and the shares of the Company is not listed on any other registered Exchange. The issuer shall appoint a Participating Institution i.e. Accredited Issuing House. This mode of admission requires active participation/compliance of the Issuer. The full register of the Company is dematerialized with CSCS.
3How long does it take to admit a Security to trade on NASD OTC market?
Between one and two weeks (subject to compliance with the Rules and requirements) depending on the mode of admission.
4What are the admission requirements for companies?
The requirements for admitting a company and security on the NASD OTC market is available
here and
here on NASD official website. Companies are placed into one of three categories; the
Blue tier, the Pink tier, and the Red tier depending on the level of disclosure which a company has provided to the market. Companies that are backed by high levels of corporate governance and current audited financial statements are placed in the Blue category; companies with low
levels of governance are placed in the pink Category while companies who are not compliant are placed in the Red category.
5Does NASD have any regulatory oversight on the admitted securities on NASD?
NASD as a Self-Regulatory Organization [“SRO”] has regulatory oversight function over all admitted securities as well as eliciting ongoing disclosure requirements from the admitted securities. The regulatory function NASD plays depends on the mode of admission. Under Security admission, the Company is not obligated to comply with NASD Rules but encouraged to disclose corporate action notices and financial statements; while under Company admission, the Company signs an undertaking to comply with the Rules and Regulation of NASD.
6NASD 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.
7Who regulates the NASD OTC market?
The NASD Securities Exchange is regulated by the Securities and Exchange Commission [“SEC”] and is also a Self-Regulatory Organization [“SRO”].
8Who are the operators in the NASD OTC market?
1. Brokers, Broker/Dealers Firms registered with NASD introduce securities and make market (either buy or sell). Kindly click
here to view a list of all Licensed Broker/Dealer Firms.
2. Accredited Issuing Houses are licensed with NASD to provide financial and Investment advice to Issuers about participating on the OTC market. Kindly click
here to view a list of accredited issuing houses.
3. 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. Kindly click
here to view appointed settlement banks.
4. The Central Securities Clearing System [“CSCS”] is the central depository for NASD OTC market and ensures completion of delivery of transactions.
9What are the official trading hours on the NASD OTC market?
Trades can be executed on NASD OTC market between the hours of 10.00 a.m. and 3.00 p.m. on weekdays (except for public holidays)
10What rules guide 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. This is readily available and accessible on the NASD official website
here.
11What are the benefits of participating/trading on NASD?
- 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
12How 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.
13Are 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.
14How 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 decide on the issue.
15What is the difference between transfer and trading?
Transfer and trading refer to the same thing, the two words both mean change of ownership of a share certificate.
16How can individuals, Investors, Journalist access NASD OTC Market Data?
While daily information/data of the NASD OTC Market can be accessed on the official website
www.nasdng.com historical market data/information can be accessed on the NASD Data portal on a subscription plan.
17Dividend related enquiries?
All enquiries on dividends of the admitted securities on NASD OTC Market are to be routed/channeled through the registrars of these companies or via your brokers.
18Is there a central database to identify the Companies listed on the NSE and NASD?
Upon receipt of an application for Admission, NASD undertakes due diligence activities to ensure the securities are registered with the Securities and Exchange Commission; and are not listed on any other Exchange.
19Can an Investor appoint the same Brokerage firm to transact on its behalf on NASD and NSE?
Yes. However, the Brokerage firm shall not co-mingle accounts; separate accounts will be opened to operate on the two markets.