The NASD OTC Exchange has called on public limited companies to adhere to a Securities and Exchange Commission (SEC) rule requiring that securities of unlisted public companies be traded exclusively on SEC-registered Over-the-Counter (OTC) exchanges. This directive aims to ensure transparency by prohibiting bilateral trading outside such platforms. The rule mandates that all securities of public companies must be registered with the SEC upon creation, with penalties for non-compliance ranging from ₦100,000 to ₦5,000 per day of default.
The SEC’s regulation specifies that securities transactions involving unlisted public companies must occur through registered exchanges to enhance oversight and prevent fraudulent activities. NASD highlighted the current gap in compliance, noting that many unlisted securities are not traded on SEC-approved platforms, limiting the Commission’s ability to monitor these companies and safeguard investors. Companies, directors, and brokers engaging in unauthorized transactions face strict penalties under the Investment and Securities Act (ISA).
NASD emphasized that strict enforcement of the rule would boost market liquidity and investor confidence. Trading on SEC-registered OTC platforms facilitates transparent price discovery, minimizes underhand dealings, and enhances portfolio diversification. Additionally, it provides broader access to securities from various economic sectors, fostering a more robust and reliable capital market ecosystem.
