Become
an Operator

Here is a step-by-step guide to the registration process, as well as the requirements for each type of CMO.

Step 1: Register your Business with the Corporate Affairs Commission (CAC)

Section 38(2) of the Companies and Allied Matters Act (CAMA) 2020 requires all companies to be registered with the CAC, therefore all businesses in Nigeria must be registered with the CAC before they can apply for registration as a CMO. To register your business with the CAC, you will need to:

• Create an account on the CAC website.
• Select the type of company you want to register.
• Complete the online registration form and pay the required fees.
• Submit your application and supporting documents.
• Once your application is approved, you will receive a Certificate of Incorporation.

For more details on CAC registration for businesses, see this guide curated for you.

Step 2: Choose a Type of Capital Market Operator (CMO)

Section 10 of the Investment and Securities Act (ISA) 2007 defines a capital market operator as "any person who engages in the business of dealing in securities or provides services in relation to securities."

If this is indeed the type of business dealing you wish to go into, it is important to note that there are different types of CMOs in Nigeria, each with its own specific functions and requirements. Some of the most common types of CMOs in Nigeria include:

• Auditors: Assess the financial statements of public companies.
• Brokers: Act as intermediaries between buyers and sellers of securities.
• Broker/Dealers: Buy and sell securities on behalf of clients and for their own account.
• Central System Depositories: Hold securities in electronic form and facilitate the transfer of ownership of securities.
• Corporate Investment Advisers: Provide investment advice to corporate clients.
• Corporate Sub-Brokers: Act as intermediaries between brokers and their clients.
• Custodians: Hold securities in safekeeping for clients.
• Dealers: Buy and sell securities for their own account.
• Estate Surveyors/Valuers: Value property for the purposes of issuing securities.
• Floor Brokers: Facilitate the trading of securities on a trading floor.
• Floor Traders: Trade securities on their own account on a trading floor.
• FMDQ OTC Dealers: Trade securities over the counter on the FMDQ OTC Securities Exchange.
• Fund Managers: Manage investment funds on behalf of clients.
• Fund/Portfolio Managers: Manage investment funds on behalf of clients.
• Individual Sub-Brokers: Act as intermediaries between brokers and their individual clients.
• Inter-Dealer Brokers: Facilitate the trading of securities between dealers.
• Investment Advisers: Provide investment advice to clients.
• Issuing Houses: Assist companies with the issuance of securities.
• Market Makers: Maintain a bid-ask spread for securities to ensure liquidity in the market.
• Over-the-Counter Exchanges: Facilitate the trading of securities outside of a trading floor.
• Portfolio Managers: Manage investment portfolios on behalf of clients.
• Property Managers: Manage property on behalf of clients.
• Private Equity Fund Managers: Manage private equity funds on behalf of investors.
• Rating Agencies: Assess the creditworthiness of issuers of securities.
• Receiving Bankers: Receive and manage subscription funds for new issues of securities.
• Registrars: Keep track of the ownership of securities.
• Reporting Accountants: Prepare and audit the financial statements of public companies.
• Securities Lending Agents: Facilitate the lending and borrowing of securities.
• Self-Regulatory Organizations (SROs): Non-governmental organizations that develop rules that promote fair and orderly trading, protects investors, and maintains high standards of conduct among market participants.
• Solicitors: Provide legal advice on capital market transactions.
• Sub-Brokers: Act as intermediaries between brokers and their clients.
• Trustees: Hold assets in trust for the benefit of others.
• Underwriters: Guarantee to buy any securities that are not sold to investors in a new issue.
• Venture Capital Managers: Manage venture capital funds on behalf of investors.
• Commodity Brokers: Intermediaries between buyers and sellers of commodity contracts, facilitating trades on behalf of clients for a commission. They do not own the underlying commodities themselves.
• Commodity Dealers: Buy and sell commodity contracts for their own account, aiming to profit from price fluctuations. They act as market makers, providing liquidity and influencing prices.
• Commodity Broker-Dealers: Combine the functions of a broker and a dealer. They execute trades for clients while also engaging in proprietary trading activities in the same commodity market.

Step 3: Meet the Registration Requirements for the Chosen Type of CMO

Section 11 of the ISA 2007 sets out the general registration requirements for CMOs. These requirements include:

• Having a minimum capital requirement, which is set by the SEC in its Rules and Regulations. The minimum capital requirements for CMOs in Nigeria vary depending on the type of CMO.

• Having directors and officers who are fit and proper to perform the functions of a CMO. These directors must be honest, trustworthy, and competent. SEC will assess the fit and properness of directors and officers based on a number of factors, including their education, experience, and financial history.
• Having a satisfactory business plan. The business plan should describe the CMO's business model, target market, and competitive strategy. It should also include financial projections for the CMO's first three years of operation.

Step 4: Apply for Registration with SEC

Section 12 of the ISA 2007 requires all CMOs to be registered with the SEC, so once you have met all of the registration requirements, you can apply for registration with the SEC. The registration process involves submitting an application form, along with supporting documents and fees.

Here are the registration requirements for each CMO:

You can only get registered and renew your license through the Operator’s Portal.

Only a “Sponsored Individual” can register a business on the portal. Learn more about sponsored individuals here.

Step 5: Undergo a Fit and Proper Assessment

Section 11(4) of the ISA 2007 requires the SEC to conduct a fit and proper assessment of all applicants for registration as a CMO. This assessment is to ensure that the applicant is honest, trustworthy, and competent to perform the functions of a CMO.

Step 6: Obtain a Registration Certificate from SEC

If your application is successful, you will be issued with a registration certificate from the SEC. Section 13 of the ISA 2007 requires the SEC to issue a registration certificate to all successful applicants for registration as a CMO. This certificate will authorize you to operate as a CMO in Nigeria.

Conclusion

The process of becoming a CMO in Nigeria can be complex and time-consuming. However, it is important to follow all of the steps and requirements carefully to ensure that your application is successful. Once you have been registered as a CMO, you will be able to offer your services to clients in the Nigerian capital market.