An investment analyst, Mr Nornah Awoh has called for stricter compliance by capital market operators and fair, balanced enforcement by regulators following sanctions totalling N291.29 million imposed on five trading licence holders by NGX Regulation Ltd, NGX RegCo.
He said the development should serve as a warning to market participants, while also reminding regulators that not every infraction stems from deliberate misconduct.
The firms sanctioned by the market regulator were CSL Stockbrokers Ltd., Cowry Securities Ltd., Meristem Stockbrokers Ltd., SMADAC Securities Ltd., and Associated Asset Managers Ltd. NGX RegCo said the penalties followed findings of market conduct breaches, including wash trades, self-matching transactions, artificial price formation, and misleading market activity.
CSL received the heaviest sanction of N91.29 million, while the other four firms were fined N50 million each. In addition to the monetary penalties, all five firms were directed to undergo mandatory compliance and market conduct training.
Speaking in Lagos, Awoh said operators must strengthen their internal controls, surveillance procedures, and compliance systems to reduce both deliberate and inadvertent breaches.
He argued that while intentional wrongdoing must be dealt with firmly, regulators should also distinguish between market abuse and honest operational errors. According to him, it would be unrealistic to expect a completely infraction-free market because mistakes are inevitable in any system driven by human beings.
Awoh maintained that the credibility of enforcement depends not only on punishment, but on fairness. He said non-deliberate infractions should push brokers to become more diligent, while deliberate violations call for stronger ethical restraint because no individual or firm is bigger than the market itself.
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In his view, protecting market integrity is a shared responsibility among brokers, regulators, and other stakeholders, and sanctions must ultimately strengthen confidence in the system rather than merely punish offenders.
The case is significant because NGX RegCo is the regulatory arm of Nigerian Exchange Group, with responsibility for enforcing listing and trading rules, monitoring market activity, and promoting a fair, orderly, and transparent market.
On its official platform, the regulator says its mandate is to protect investors and support healthy capital markets by promoting integrity, transparency, and efficiency across the exchange. That broader mandate helps explain why the regulator has placed increasing emphasis on surveillance, compliance, and deterrence.
At the centre of the sanctions are trading practices that regulators worldwide generally view as harmful to market confidence. Wash trading refers to buying and selling a security at the same time in order to create a false impression of activity, liquidity, or investor interest.
Self-matching, or self-trading, occurs when the same entity effectively ends up on both sides of a trade, producing no real change in beneficial ownership. Industry guidance distinguishes between manipulative wash trades and some inadvertent self-matches, which can occur when separate trading strategies within the same firm unintentionally cross. That distinction is part of the reason Awoh has argued for fairness and context in enforcement.
For the Nigerian capital market, the sanctions send two messages at once. First, they suggest that exchange-level regulators are taking a firmer stance against conduct that can distort price discovery and mislead investors.
Second, they underline the growing cost of weak internal compliance systems for brokerage firms and other market operators. Analysts say this kind of enforcement, if applied consistently and fairly, can help strengthen discipline, improve transparency, and reinforce investor confidence in the market.
In that context, Awoh’s intervention appears to strike a middle ground: support tough action against deliberate abuse but avoid treating every breach as evidence of bad faith. His position is that a stronger market will come not only from bigger sanctions, but from better compliance culture, sharper oversight, and a regulatory approach that is both firm and just.
NAN
