REMARKS BY THE HONOURABLE MINISTER OFSTATE FOR FINANCE, REMI BABALOLA AT THEINAUGURATION OF THE COMMITTEES TO REVIEWTHE INVESTMENTS AND SECURITIES ACT 2007 ANDTO DESIGN THE CODE OF GOVERNANCE FORCAPITAL MARKET REGULATORS ON THURSDAY,27

MAY 2010.

Protocols

I am highly honoured and delighted to welcome you all to theinauguration of the Committees to review the Investments andSecurities Act, 2007 and to design Code of Governance forCapital Market Operators.As you will recall, the current Investments and Securities Act(ISA) was signed into law on 25th June 2007. Since then, anumber of developments have occurred in the financial servicesindustry of the economy, particularly in the capital market. Duringthis period:

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The Nigerian Stock Exchange market capitalizationwitnessed significant volatility setting record high values ofover N12 trillion as well as record low values of N6.9 trillion

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New issues reached a record of N1.3 trillion in 2007 againstN278 billion in the previous year.Without a doubt, investor sentiments were high due to theincreasing share prices over this period and in many cases

without sufficient fundamentals backing those share prices. Thishigh level of volatility was attributable to various reasons includingliquidity squeeze or easy access to funds, global financial crisis,margin lending, etc. and some level of regulator inducedweaknesses.The capital market is one area of my responsibilities I believe wehave put in so much brain and hardwork and we have limitedsuccess to show for it. The crisis was domestically hatched butsurely accentuated by the global economic developments. This isstill part of our designed programmes to aid market recovery andnavigate to sustainable growth.Globally, regulatory lapses have been highlighted as a downsiderisk for the unusual market downturn. Inevitably, these regulatoryprocedures have now become the subject of examination andcriticism. Nigeria is no exemption. We must ensure adequatesteps are taken to sustain investor confidence and build a markethinged on integrity and full disclosure.As we emerge from a very traumatized investor period, we mustposition our regulators to protect investors. Most especially nowthat we have a large base of retail investor community thatemerged during the market euphoria. Going forward, ourregulatory and enforcement framework must be strong enough toavoid future breaches in securities law as contained in the Act.How can we leverage on the capital market to boostentrepreneurship, support the real sector and dent unemploymentcankerworm? We cannot have a capital market that is strong, fair,efficient and robust if we do not subject the overarching law toconstant updates and hold our regulators to non-negotiableminimum standards of conduct.The essence of today is in line with our purpose to transform ourcapital market to a reference point in Africa where there is

investor confidence, market integrity, sound regulatory frameworkand international standard of corporate governance. Under ourleadership, there is a strategic transformation agenda forSecurities and Exchange Commission as well as the NigerianStock Exchange to enhance the performance and contribution ofthe Nigeria’s capital market. We enjoin the two organizations toensure prompt implementation.Over the last few months, there have been agitations to align theexisting regulations as contained in the ISA 2007 with currentrealities and international best practices. Thus, the need to set upa Committee to review the ISA 2007 and prepare a Draft Bill to beforwarded to the National Assembly for amendment and signinginto law by Mr President.In addition to the above, certain issues having regulatorytransparency and proper supervision of the capital marketbecame relevant especially in the wake of the capital marketdownturn. We must take advantage of this opportunity toimplement the provisions of Section 12 of the current Investmentsand Securities Act which requires that a zero tolerant code ofGovernance for Capital Market Regulators must be put in place.This code will act as the behavioral mantra to guide the activitiesof all capital market regulators. We cannot hide under the law to justify what is not morally and ethically acceptable.We are all aware that human behaviors are shaped by the level ofrules built around them. Law violation must be deemed to betotally unattractive and unprofitable. This, we regard as a greatopportunity to take adequate steps to turn a new page in capitalmarket regulation and supervision with reference to internationalbest practices, transparency and governance ethics.