1. Introduction
Companies looking to raise working or project capital may do so by issuing equity or debt securities. Debt securities are financial instruments which represent that a debt has been issued. Companies sell these debt securities to investors on a promise of repayment at a future date. They may be either short, medium or long term, which reflects the length of the maturity period or period for repayment. Examples of debt securities are bonds, bills notes, papers, etc.

Commercial papers are a popular form of short-term debt security. They are short-term promissory notes, usually unsecured, and a with maturity period of under a year, generally not exceeding 270 days. They are issued by credit worthy companies to meet their short-term obligations. Being short term debt securities, they are regularly traded on the money markets as money market instruments. However, commercial papers are rarely listed and are usually traded at over-the-counter (OTC) markets.

2. Laws and Institutions Governing the Issuance of Commercial Papers in Nigeria
In Nigeria, the issuance of securities is regulated by the Securities and Exchange Commission (SEC), the agency established under the Investment and Securities Act (ISA) of 2007 for the regulation of investments and securities business in Nigeria. As noted above, commercial papers issued by a company are securities and they are therefore regulated under the ISA by the SEC. However, as we will see in section 3 below, the SEC does not directly regulate the issuance of commercial papers in Nigeria as they are not usually issued directly to the public.

The issuance of commercial papers in Nigeria is also regulated by the Central Bank of Nigeria (CBN), as banks are usually a party to commercial paper transactions and the CBN is the regulator of banking business in Nigeria. In July 2016, the CBN, exercising its powers to regulate banks and commercial papers, issued a circular in July 2016 titled “Letter to all Deposit Money Banks and Discount Houses: Mandatory Registration and Listing of Commercial Papers,” where it approved the quotation rules of FMDQ OTC Securities Exchange (i.e. the FMDQ Rules) and cleared it for the quotation of commercial papers in Nigeria. Through the Circular, the CBN mandated that deposit money banks and discount houses only deal in commercial papers that are registered, quoted on intended for quotation on Authorised Securities Exchanges, whether acting in the capacity of an issuer, guarantor or Issuing, Placing, Paying and Collecting agent (IPCA), Collecting and Paying Agent (CPA), etc. Thus, issuers who wish to register and quote their commercial papers on the FMDQ platform must comply with the FMDQ Rules.

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