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SEC Releases New Shariah Advisory Services Rules For Non-Interest Capital Market Products

The Securities and Exchange Commission has exposed new rules on Shariah Advisory Services for non-interest capital market products and services.

According to Commission, Shariah governance is crucial considering that compliance with Shariah rules and principles is important in Non-interest Capital Market operations/transactions.

It said the provision of the rules is in line with local and international best practices.

The regulatory organization in the Nigerian Financial System such as CBN, NAICOM had issued such guidelines to provide clear and good Shariah governance in their respective sectors.

“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” the Commission stated.

The Commission stated that the Non-interest Capital Market activities in recent times are exponentially increasing as the market is witnessing the entrance of more asset managers, emergence of i-REIT, listing of sovereign Sukuk on the Exchanges, issuance of corporate Sukuk, emergence of shariah advisory function.

“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.

Further to the above, the Commission stated that a review exercise on the 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.

Going by the Rule, an issuer or fund manager with the consent of the trustee (where applicable) shall appoint a Shariah Adviser to provide Shariah Advisory services for Shariah products, issuances and schemes.


A capital market operator seeking to provide Shariah compliant products and services shall appoint a registered Shariah Adviser for the firm and notify the Commission of such appointment within five (5) business days of the appointment.

The rule stipulates that the SEC may register a Shariah Adviser or renew the registration of a registered Shariah Adviser subject to the applicant satisfying some criteria.

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