The Association of Securities Dealing Houses of Nigeria (ASHON) is the umbrella body of all the Securities Dealing Members Firms in Nigeria. The members are trained and certified to trade on all asset classes across securities trading platforms in the Nigerian financial market. They are duly registered by the Securities and Exchange Commission (SEC) as a Trade Group.
ASHON was legally registered by the Corporate Affairs Commission (CAC) on 1st day of June, 2005 as the Association of Operators of Stockbroking Houses of Nigeria under Part C-Incorporated Trustees. The operations started fully in 2006. The Constitution of the Association was amended on 26th day of September, 2012 and the name was changed to: Association of Stockbroking Houses of Nigeria. As a proactive Association, it rebranded to reflect the wide spectrum of its members’ functions which is not limited to equity alone. Thus, it’s Constitution was further amended on 5th day of March, 2019 and the name changed to Association of Securities Dealing Houses of Nigeria (ASHON) with the same acronym.
Its primary objectives are setting professional and ethical standards for practitioners and ensuring compliance with the set standards for the Securities Dealing Houses in Nigeria.
Other objectives are as follows:
- To enable members approach or collaborate with the Government, SEC, NGX, CIS, NASD, FMDQ, other Trade Point, and other Registered Securities Exchanges as a single body in order to facilitate the formulation of policies affecting the Capital Market and other related issues.
- To proffer sound professional and ethical standards for practitioners and advice on compliance with the set standard in conjunction with the regulatory bodies established by statute.
- To promote free interplay of market forces.
- To enable members, interact with one another on issues concerning the capital market in general and the Securities Dealing Firms in particular.
- To promote and protect the interest of members of the Association in the exercise of their duties as Securities Dealing Firms.
- To encourage professional development of Securities Dealing Firms through organizing lectures, seminars, workshops, retreats etc.
- To provide avenue for free flow of information among members and to encourage research on capital market matters/operations.
- To relate with other professional bodies with a view to building a viable Nigerian Financial Market
- To nominate for representation, members in good financial standing on the Council of the NGX and any other relevant Exchanges in Nigeria.
The Financial year end of the Association is 1st day of January to 31st day of December of every year. The members of the Association pay an annual subscription fee to run its affairs. The Association, also leverages other incomes such as grants, organized events, sponsorship etc. to meet up it’s financial obligations.
It operates a a six-man Board of Trustees and a nine-man Governing Council. The day to day running of the Association is under the supervision of the Executive Secretary who doubles as the Chief Executive Officer (CEO) of the Association. All other staff of the Secretariat reports to him whilst he reports to the Governing Council. The Governing Council is the highest decision-making body of the Association.
The Association’s office is at Medife House (3rd floor), 58/60. Broad Street, Lagos. The Vision and Mission of the Association are as follows:
Vision: To be the professional trade group of high ethical standards in the Nigerian Capital Market.
Mission: To encourage continuous collaboration with all stakeholders in the Nigeria Capital Market through regular and structured interactions in defining and redefining our strategic vision.
- Purpose.
- Definitions
- Scope
- Membership.
- Duties:
- Duty of disclosure
- Duty of diligence
iii. Duty of loyalty
- Compliance with laws
- Ethical conduct
- Competition and fair dealing
vii. Reporting violations
viii. Response to report of violations.
- General Codes of Conduct
- a) Codes of Conduct for Securities Dealing Firms of a Recognized Exchange
- b) Code of Conduct for Employees of Securities Dealing Firms
- c) Code of Conduct Peculiar to Employees of Broker/Dealer Firms
- d) Code of Ethics Peculiar to Securities Dealing Firms with Issuing Houses Licence
- e) Code of Ethics for Securities Dealing Firms with additional function of Investment Advisers/Portfolio Managers
- f) Code of Ethics Peculiar to Securities Dealing Firms with Registrars’ Departments
- Sanctions for Violations
PURPOSE
The following guidelines are enunciated to maintain and foster good reputation and high standards of Securities Dealing business in Nigeria:
- Clients effecting securities transactions must be able to receive professional, fair and transparent service.
- Securities Dealing Firms should ensure efficient business organization, professional training and compliance with the enabling rules and regulations.
- Securities Dealing Firms must disclose their services to the effect that their clients are able to assess adequately the rights and duties arising from securities transactions as well as special risks inherent in particular types of securities transactions.
- The code of conduct does not otherwise affect the legal relationship between Securities Dealing Firms and their clients, which is governed by the enabling rules of securities trading platforms which ASHON Members trade and that of Securities and Exchange Commission (SEC) in Nigeria.
- The provisions of this Code of Conduct are also guided by the Constitution of the Association as amended.
Definitions:
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SEC or Commission |
Securities and Exchange Commission; |
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APC |
–Administrative Proceedings Committee of SEC; |
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Operators/Registered Institutions |
–All capital market operators and Individuals registered with the Securities and Exchange Commission; |
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SRO |
–Self-Regulatory Organisation; |
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His |
–Refers to both genders; |
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Director
Securities Dealing Firms |
–Refers to Executive or Non Executive Director. -Registered Member Firms of ASHON
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Scope:
All Securities Dealing Firms and their employees are bound by this code. When in doubt about any of the provisions of this code, initial consultation should be made with the constitution of the Association, the Rules of a recognized Trade Point and further clarification should be sought from the SEC.
Persons having business interest with these institutions such as auditors, accountants, lawyers etc., who in the course of such business relationship might have access to price-sensitive, non-public information about clients of registered institutions, must enter into an undertaking (oath of secrecy or non-disclosure agreement) to keep such information confidential.
It is obligatory for employees to bring to the notice of management, suspected breaches of the securities laws or other unethical behaviour by other employees. Such reports should be treated in strict confidence. In essence, the identity of the reporting officer must under no circumstance be disclosed to other members of staff.
MEMBERSHIP
The membership of the Association is open to all Financial Institutions licensed to operate as Securities Dealing Houses in Nigeria by The NGX or any registered Securities Exchange and registered by the Securities & Exchange Commission (SEC) and /or other appropriate regulatory bodies. Each member of the Association shall by instrument in writing signed on its behalf by duly authorized persons and delivered to the Association appoint one (1) person and alternate being officers of such member to be member’s representative to partake in the affairs of the Association.
A year subscription fee of an amount determined as per the constitutional provisions in Clause 8, shall apply to all registered members and must be paid before the end of the first quarter into the New Year. In likewise, the constitution stipulates the payment of other contributions (dues and legitimately imposed levies or fines) upon the recommendation of the Governing Council.
Late subscription levy and/or penalties shall apply as stated in the constitution if payment is not received before the last working day of the first quarter.
Duties:
DUTY OF DISCLOSURE
Securities Dealing Firms must attune the disclosure to the client’s business knowledge and experience.
In principle, it is right to assume that the client is aware of the risk commonly associated with the purchase, sale and holding of securities.
Securities Dealing Firms are therefore required to provide standardized or individual disclosure with regard of types of transaction where the risk potential exceeds the common risk Associated with purchase, sale and holding of securities.
No stockbroking firm may recommend or attempt to cause any securities transactions by a client or participate in any investment decision without disclosing his interest in the securities.
A stockbroking firm is not liable to disclose risks, provided that the client declares in writing that he/she is aware of the explicitly defined risk inherent in individual transactions and refrains from receiving any supplementary information related thereto.
- DUTY OF DILIGENCE
Securities Dealing Firms must execute their securities transaction on a generally recognized exchange.Subject to the relevant market regulations, Securities Dealing Firms may execute trades on behalf of their clients from their own accounts provided that this is not to the client’s detriment.
Client’s transactions must be executed immediately, completely ( subject to prevailing market condition) and at the best possible market rate taking into account any limits, special instructions and reservations as laid down by the client.
Transactions with securities traded over the counter must be executed at a price which is consistent with the market price.
Unless specifically agreed by the client, securities transactions may not be executed at a price that deviates substantially from the market price.
The execution of a transaction should be confirmed and settled by the close of trading of the same day.
iii. DUTY OF LOYALTY
Securities Dealing Firms must take appropriate organization measures to either prevent conflicts of interest between their clients or ensure that conflict of interest are not detrimental to the client’s interests.
Securities Dealing Firms must apprise the client any disadvantage the client has incurred as a result of conflict of interest which was inevitable due to exceptional circumstances.
Clients must be treated fairly and equally. Their transactions must be treated equally under equal circumstances. Firms must be in a position to furnish the client with all explanatory information if due to prevailing market conditions with respect to price, volume or timing, competing clients transactions in line with the instructions received were not executed.
Firms must adopt chronological execution of transactions. Securities transactions must be executed or scheduled for execution by order of instruction entry, irrespective of whether such transactions are being executed for client’s account, the stockbroking firm’s own account or an employee account.
The principle of chronology applies unless a conflict of interest is prevented by operational segregation (e.g. of proprietary from client trading business).
Acting in all client’s best interest, Securities Dealing Firms may deviate from the polity of chronological execution of securities transactions.
- COMPLIANCE WITH LAWS
The association will proactively promote compliance and members must conduct their activities in line with rules of the Securities and Exchange Commission – SEC as well as the rules and regulations of all recognized Exchanges as applicable to a particular client or transaction.
Every member is obligated to comply at all times and all respect with these laws.
- ETHICAL CONDUCT
Beyond compliance with the law, the Association requires that employees of Securities Dealing Firms act in a manner consistent with the highest standard of ethical behaviour. This includes the obligation to avoid any actual or apparent conflicts of interests. The honesty and integrity of our business conduct must not be compromised.
- COMPETITION AND FAIR DEALING
Members can seek to outperform competition fairly and honestly. Competition advantages can be sought through superior performance and not through unethical or illegal business practices.
No member should take unfair advantage of another member through manipulation, misrepresentation of material facts or any other intentional unfair – dealing practice.
vii. REPORTING VIOLATION
Employees of Securities Dealing Firms have a personal responsibility to report violations of this code of conduct, including any violations of the laws of SEC, as well as the rules and regulations of any recognized securities exchange.
viii. RESPONSE TO REPORT OF VIOLATIONS
The officials of the association will investigate any report of violation of this code of conduct.
Members are required to cooperate with and support the association’s investigation of any suspected violations.
If a violation is found to have occurred, the officials of the association will take appropriate disciplinary action, up to and including blacklisting from membership and any other corrective action.
- GENERAL CODES OF CONDUCT:
This code of conduct constitutes the professional ethics for all Securities Dealing Firms subject to the rules of the Securities and Exchange Commission. It contains the duties of disclosure, due diligence and truth as set forth in the rules and regulations of The Nigerian Stock Exchange Limited and shall accommodate the rules and
regulations of other securities platforms where ASHON Members elect to trade.
a). Code of Conduct for Securities Dealing Firms of a Recognized Exchange.
All Securities Dealing Firms:
(i)Shall strictly abide, at all times, by all existing Securities Laws, Rules, Regulations Practices and Ethical Code;
(ii)Shall ensure that any dispute among themselves will initially be referred to ASHON members. If ASHON is not able to settle a dispute to the satisfaction of the parties involved, such dispute will then be referred to the Administrative Proceedings Committee of SEC. Under normal circumstances, it is only where the APC is also unable to resolve such dispute to the satisfaction of all the parties involved that a court action can be instituted in respect of such dispute;
(iii)shall not engage in any act that would adversely affect the general investing public’s image of, and confidence in, the capital market;
(iv)shall ensure that their employees act in a manner that is consistent with the best interest of their clients. To this end, Dealing Member Firms shall preserve the confidentiality of all clients’ information;
(v)shall operate securities trading accounts strictly according to clients’ instructions;
(vi)shall segregate clients’ monies and keep such funds in a separate account;
(vii)shall ensure that employees maintain their securities trading accounts with their employers, where practicable, or provide full disclosure of such accounts and all activities therein to their employers;
(viii)shall monitor the transactions in securities by all directors, employees and their spouses, dependent children and relatives;
(ix)shall have a duty to report in writing to the SEC, any actual or suspected breach or infringement or non-compliance with any of the regulations of the Commission. Operators will immediately notify the Commission in writing of any other events or matters that the Commission may from time to time specify;
(x)shall not recommend or
connive in the employment of any person who has been employed by another operator and has had his employment terminated or who was dismissed for reasons relating to fraud, dishonesty or any such dishonourable behaviour, or who has been convicted of an offence involving same;
(xi)shall communicate to the SEC, and appropriate recognized Securities Exchange, the names of staff dismissed for any fraudulent act, dishonesty, misbehaviour or, any other acts of misconduct;
(xii)may pay or be paid for services provided free of charge with respect to financial products and services. For example, research material may be provided to investment companies in return for commission income from securities trading orders. However, in such cases the volume/amount of financial products and services must be reasonable and commensurate with the services provided; and
(xiii)shall not discriminate or give preferential treatment to any customer, including members of the general public, in the conduct of their professional business.
b). Code of Conduct for Employees of Securities Dealing Firms
An employee shall—
(i)at all times conduct himself with integrity and display high level of professionalism expected of the industry;
(ii)not engage in any act that would adversely affect the general investing public’s image of, and confidence in, the capital market;
(iii)not discriminate or give preferential treatment to any client, in the conduct of his professional business;
(iv)comply with all existing securities laws, rules and regulations thereunder.
Disclosure of Information by Employees—
(1)To prevent possible conflict of interest, insider dealings and impropriety, an employee must disclose to his employer, transaction in securities by himself, spouse, dependent children and relatives;
(2)Periodically, (as may be determined by the institution), employees must submit to management, statement of their personal securities investment portfolio in the securities market;
(3)All new employees must at the time of assumption of duty lodge details of their holdings in long term securities of government and public companies with their employers;
(4)Although employees may be allowed to invest in securities of private companies, such investment shall be disclosed to the employer when the affected company is about going public.
Avoidance of Conflict of Interest
An employee shall ensure that his personal interest does not at any time conflict with his duty to his employer’s clients. In this regard, all personal interests beneficial or not, in any company assigned to him must be disclosed to his employer. He must also ensure that his advice to clients or his employer on investment decision on behalf of clients is not beclouded by any conflict of interest which might exist. In other words, in the performance of his duty, his client’s best interest must be given priority over his personal interest.
An employee shall not engage in any activity which might directly or indirectly influence his judgement prior to or during a business transaction.
Trading with Insider Information
An employee shall not trade in securities either for himself or on behalf of others based on non-public price-sensitive information. Such information shall under no circumstance be disclosed to a third party for the purpose of trading. Employees of Broker/Dealer firms must pay particular attention to substantial orders from clients in companies in which such clients are directors, employees, or have business relationship, e.g. auditors, reporting accountants and lawyers. Furthermore, all orders which are out of tune with established trading pattern should be investigated.
All suspected cases of insider dealings including those involving employees should be promptly brought to the notice of management which should in turn lodge a formal report with the S.E.C. for necessary action.
Market Manipulation
An employee must not on his own or in connivance with others engage in activities aimed at manipulating the market. Unverified information which might impact on the market must not be circulated or form the basis of advice to clients.
Staff Employment
An employee shall not recommend or connive in the employment of any person who has been employed by another operator and has had his employment terminated or who was dismissed for reasons relating to fraud, dishonesty or any such dishonourable behaviour, or who has been convicted of any offence involving same.
Clients’ Account
An employee shall uphold the confidentiality of clients’ accounts. No information in a clients’ account must therefore be disclosed to other employees who have no bona-fidereasons to know.
Deposits/Credit Arrangements and Gifts
An employee shall not—
–deposit clients’ funds in his personal account or accounts of others or vice versa;
–act as trustee or executor for clients;
–enter into direct or indirect undisclosed arrangements, before or subsequent to transactions, to share in profits or losses;
–enter into a credit arrangement on behalf of clients unless through the institution.
Duty to Employer
An employee shall not, except with the approval of his employer, engage in any activity whether or not for compensation, which is in direct competition with his employer.
c). Code of Conduct Peculiar to Employees of Broker/Dealer Firms
An employee of a Broker/Dealer firm shall—
–operate strictly within the Rules and Regulations of the Stock Exchange or other licensing authority with which he is registered;
–willingly and promptly disclose to his superior officer mistakes or errors that may lead to monetary loss to clients;
–not under any circumstance utilise a client’s funds other than in strict compliance with the client’s instructions and requirements;
–keep proper records and books of account of clients;
–fully disclose any dealing in securities to the firm’s management;
–maintain personal trading accounts with his firm of employment. No account should be held with another broker/dealer firm without the prior approval of the management;
–operate securities dealing account in accordance with client’s instruction.
An employee of a broker/dealer firm shall not—
–manipulate the demand for or supply of securities in the market in order to influence prices of securities. In this regard, a broker/dealer must not falsify orders thereby creating artificial supply or demand in the market;
–act in concert with others without reasonable justification to influence price movements of securities in the market;
–on his own or in connivance with others alter or forge share/stock certificates, transaction records and other related documents;
–accept or execute any order not emanating from the beneficial owner of an account or certificate;
–accept or execute any order in which the true identity of the beneficial owner is concealed;
–take advantage of a client’s order by first buying into or selling from his own or the institution’s account or advise others to do same. This could amount to market manipulation;
–transact business for his account or advise others to do same based on an order by a client perceived to have insider knowledge about the security.
d). Code of Ethics Peculiar to Securities Dealing Firms with Issuing Houses Licence
Once an issue is before an issuing house for sponsorship, an employee with unpublished price-sensitive information shall not:
–effect transaction on the security for his own account;
–disclose such information about the issue to other members of staff or professionals who have no reason to access the information.
An employee shall not:
–lodge proceeds from an issue in his account or in the accounts of others;
–engage in fraud, bribery, or attempt to engage in fraud, extortion, fronting for ineligible investors and other dishonourable conduct or behaviour inconsistent with equitable principles of business;
–engage in market conduct aimed at creating a false market or unduly affecting the value of securities such as the provision of false information to the market and circulation of unsubstantiated or false rumours;
–knowingly submit false information to management or regulatory authorities;
–engage in unbusiness-like conduct or any acts detrimental to the interest and progress of the capital market;
–knowingly connive or recommend persons of dubious character and record for employment by any firm in the securities industry;
–engage in any alliances or arrangements with a view to interfering with the market, in order to increase profits or limit losses arising from underwriting activities.
An employee shall:
- Be careful and diligent in giving advice to prospective issuers of securities;
- Exhibit care, objectivity and competence in the valuation of securities and general handling of issues before him;
- Separate all application monies that come into his possession and promptly lodge all such funds into the designated accounts;
- Hold for a minimum period of six months subsequent to the issue any holding in security packaged by his employer before sale may be effected. Unit Trust Schemes are however exempted from this restriction.
- Code of Ethics for Securities Dealing Firms with the additional function of Investment Advisers/Portfolio Managers
An investment adviser shall:
- Exhibit diligence, thoroughness and competence in his investment advice to clients and in managing investors’ funds where he also acts as a portfolio manager. The clients’ best interest must influence his investment decision at all times;
- Maintain proper records of all investment decisions made on behalf of clients;
- Send at the end of every quarter statements to clients showing their investment positions during the period;
- Disclose to clients when giving investment advice whether the advice is based on facts or opinion;
- Bear in mind at all times, that investment is a risk. In advising his clients therefore, no guarantee as to the future performance of the investment must be given;
- Be compensated (i.e. charge fees) for advisory services and investment management in accordance with industrial standards as approved by the Securities and Exchange Commission from time to time;
- Take adequate care and display integrity in the management of investors’ funds. A portfolio manager must avoid the mismatch of term commitments;
- Not deposit investors’ funds in his personal account or the accounts of other persons;
- Not employ investors’ funds to acquire assets for himself, his companies or others’ or otherwise employ the funds in violation of his mandate;
- Display impartiality and objectivity in his relationship with his clients;
- Not invest his clients’ funds in his business or businesses controlled by him, his associates, relations and subsidiaries of those companies without a prior disclosure of his relationship with the companies to the clients.
- Code of Ethics Peculiar to Securities Dealing Firms with Registrars’ Departments
The Dealing Member Firm shall:
- In all cases of transfer of securities, carefully and properly verify all signatories with specimens lodged with the department;
- Properly reflect all changes in address and/or signature in the register;
- Act honestly and in good faith in the ordinary course of business and in a manner that is consistent with the best interest of the investing public and growth of the capital market;
- Not delay without reasonable cause and authorisation, the despatch to any share-holder of his dividend warrant, return money, share/stock certificate and notices of annual and extra-ordinary general meetings. In addition, care must be exercised in addressing mails for despatch to share/stock holders;
- Not on his own or in concert with others, forge, deface, alter or convert any security document;
- Not lodge in his own account or in the account of others or in any manner, misappropriate funds meant for share/stock holders.
Sanctions for Violations
A Dealing Member Firm who shall be found guilty under a disciplinary proceeding of ASHON. for a violation of any provision of this code of conduct shall be referred to SEC, NSE, NASD, FMDQ, LCFE, CIS and may be suspended or expelled from the capital market and may in addition be liable for any other penalty prescribed by law.
- (a) Any violation of this code of conduct by a registered Securities Dealing Firm of ASHON or registered individual or an employee of a Securities Dealing Firm shall be cause for appropriate disciplinary and/or remedial action by the Securities Dealing Firm or for disqualification or suspension from ASHON membership which may be in addition to any other penalty prescribed by law.
(b) Remedial action by a Dealing Member Firm may include:
(i)Changes in assigned duties;
(ii)Divestment by sponsored individual or an employee of his conflicting interests;
(iii)Disciplinary action; or
(iv)Disqualification for a particular assignment.
(c) Any disciplinary or remedial action taken by a Securities Dealing Firm shall be reported in writing to the ASHON and to the Commission.
(d) Any suspension or expulsion of a member by ASHON for violation of this code shall be notified and communicated in writing to the Commission.