The Securities and Exchange Commission (SEC) Nigeria has indicated that plans are going on to release a new guideline on Shariah Advisory Services for non-interest capital market products and services.
The commission disclosed that the latest regulatory guideline had become imperative since Shariah governance is crucial considering that compliance with Shariah rules and principles is important in non-interest capital market operations/transactions in the country.
It stated that the provisions of the proposed rule were in line with local and international best practices.
The capital market regulator further clarified: “Making the Shariah Advisory service a registrable function in the market will assist in effective implementation of the proposed consolidation of the Shariah governance rules and will also be an additional source of revenue to the Commission.”
According to the commission, the non-interest capital market activities were increasing in recent times as the market continued to absorb more asset managers, the emergence of i-REIT, listing of sovereign Sukuk on the Exchanges, issuance of corporate Sukuk, emergence of Shariah advisory function, etc.
The capital market regulator pointed out that “these developments coupled with the necessity of Shariah services for the market affirms the critical need for a framework/guideline to set a minimum standard for persons (corporate or individual) seeking to provide Shariah advisory services for Non-Interest Capital Market activities.
“The guideline is essential for the development of this nascent sector, as it will promote transparency and confidence, whilst creating a level playing field for all participants in the market”, it added.
The SEC stated that a review exercise on its existing Rules on Shariah governance undertaken by the Standing Committee of Deepening Non-interest Capital Market led to the recommendation that rules be drafted to provide for the registration and regulation of Shariah advisory services in line with international best practices, hence, the proposed Rules for Shariah Advisory Services for Non-Interest Capital Market Products and Services.
It would be recalled that recently some regulatory institutions in the Nigerian financial system such as the Central Bank of Nigeria (CBN) and the National Insurance Commission (NAICOM) had issued such guidelines to provide clear and best practices Shariah governance standards in the banking and insurance sectors.
