Corporate Governance

Risk Disclosure Statement

Citi Investment Capital Limited (CICL) is registered with the Securities and Exchange Commission (SEC) and licensed by the Nigerian Exchange Limited (NGX) to carry on securities trading business.

Generally, securities investments are suitable for Clients who fully understand and appreciate the risks involved. It is highly speculative, involves a high degree of risk and may result in the loss of the entire investment. Therefore, before deciding to trade equities, debt securities, and/or other related ancillary or capital market operations, Clients should carefully consider their objectives and risk appetite. The Client should exercise particular care in evaluating the risks involved and must decide whether in the light of the assessed risks, investment is appropriate. Clients should be aware that there are always significant risks involved when investing in securities in the capital market. Many unforeseen events such as new and existing government policies, domestic and international political and economic events, and other events of force majeure (acts of God, war, riot, urban unrest, terrorism, epidemic, pandemic, natural disasters etc.) may cause sharp market and price fluctuations. Clients are encouraged to consider all risks (material and non-material) as well as other qualitative and quantitative risk factors associated with investing in securities which differ across board.

Additionally, Clients should fulfil specific requirements laid out by CICL, which are subject to guidelines, rules and regulations prescribed by SEC, NGX and international best practices. Clients should note that any information contained in the Risk Disclosure Statement may also become outdated relatively quickly.

The Client should acknowledge and accept each of the risks listed and accept that all these risks could lead to the loss of some or the entire value of the Client’s investments.

A. Risks Associated with Securities Trading
1. Investment Risk: All securities investments risk the loss of capital. Many unforeseeable events, including actions by various government agencies and domestic and international political and economic events and other events of force majeure, such as acts of God, and certain other events beyond reasonable control (e.g., war, riot, urban unrest, terrorism, epidemic, pandemic, natural disasters etc.), may cause sharp market and price fluctuations.

2. Market Liquidity: Some of the listed securities in which the Client may invest, may be traded in very low volumes as such, there is the risk that investments may not be easily liquidated. The prices and values of securities can also be influenced by outside factors such as interest rate changes, price or level of any underlying asset, level of interest rates, foreign exchange rates, volatility, and liquidity.

3. Currency Risk: The potential for profit or loss from transactions in foreign currency-denominated securities (traded locally or in other jurisdictions) will be affected by fluctuations in foreign exchange rates. Clients or companies that have assets or business operations across national borders are exposed to currency risk that may create unpredictable profits and losses.

4. Execution Risk: We, CICL acting as a broker for the purchase, sale and/or investment in the Securities, may, on certain occasions, not be able to execute the purchase or sale or to undertake any action relating to the securities in accordance with the Clients’ instruction. These occasions include, amongst other things, a situation where the market conditions are not favorable, the order cannot be matched, the laws and regulations of the Exchange or other competent authorities impose limitations, etc.

5. Commission, Fees, Interest and Other Charges: All regulatory fees, commissions, charges are as approved by the regulatory authorities. The Client should obtain a clear explanation of all commissions, fees, interest, and charges, and understand that these charges may affect the Client’s net profit (if any) or increase the Client’s loss. The Client agrees that he/she will be liable for these charges (as may be amended from time to time).

6. Settlement Risk: Settlement risk may arise because of technological issues or glitches within the infrastructure thus resulting to a delay in executing Clients’ mandates.

B. Risk Relating to the Investor’s Own Investment
Each decision by a Client to invest in the securities is his/her own independent decision. The firm is not acting as an advisor. Before making a decision to invest, Clients should have confirmed that they have carefully studied and considered all information relating to the status, business, financial condition and operation of the company/entity issuing the securities, including the underlying assets of or other information relating to the securities in which the Clients will invest, and other relevant factors relating to the investment such as political, economic, legal and regulatory conditions, as well as market conditions, demand, supply and price of the underlying goods of the securities. As a result, the Clients bear all risks from the investment.

C. Regulatory Risk
CICL is subject to the various laws and/or regulations of the competent relevant regulatory authorities. Any legislative or regulatory changes may impact the functions of the broker/dealer. All transactions performed by CICL will be executed in accordance with the relevant rules and regulations and any that fall contrary to the existing regulatory framework may be nullified by the regulatory authorities.

D. Non-Advisory Nature of Relationship
Unless the Client has a specific agreement with CICL for the provision of advisory services or fund management services, the Client should note and accept that the relationship with CICL in relation to the Client’s securities and securities-related transactions is purely execution only. Whilst the firm will always exercise all due care and skill while carrying out capital market services on behalf of the Client, all final investment decisions are taken by the Client and not the firm. CICL merely acts in a non-advisory capacity and executes orders on behalf of the Client unless otherwise specifically stated.

E. Risk Relating to Digital Trading
A Client can decide to trade electronically through the platform of his/her broker on his/her own account thereby taking responsibility for his/her action. Trading via digital channels is subject to certain risks including, but not limited to, technological glitches, time-lag between order entry and real execution due to delay transmission, password compromise, viruses and other possible harmful elements that could corrupt, compromise, harm or otherwise impede the operation or performance of a computer system or network. Clients should ensure that they go through the terms of service applicable to any online service they wish to subscribe to.

Clients should also ensure that they maintain appropriate security measures in the operation of their online accounts including using strong passwords, keeping their passwords and log in details safe, avoiding log in from public computers and keeping their computers protected from viruses, etc.

The Nigeria Data Protection Regulation (NDPR) The National Information Technology Development Agency (NITDA) is statutorily mandated by the NITDA Act of 2007 to develop regulations for electronic governance and monitoring of the use of information technology and electronic data.

Best Execution Policy Statement

1. Introduction

1.1. Citi Investment Capital Limited (“CICL”) is registered with the Nigeria Exchange Limited (the Exchange) and Securities and Exchange Commission (the Commission) as a Broker.

1.2. Following the Exchange and the Commission programs to modernize and globalize the Market’s structure and operations, CICL has developed this document to put forward our considerations for achieving best possible execution results on behalf of our clients, which is a major pillar of the Market’s viability and sustainability.

1.3. In this capacity, CICL is often required to execute non-DMA (non-Direct Market Access) equity trades on its Clients’ behalf, on receipt of the Client’s mandate and considering specific instructions. This scenario differs from the DMA scenario where trades are executed automatically with no input from CICL brokers.

2. Policy Principles

2.1 Our Best Execution Policy Statement describes the factors that we have considered to obtain the best possible execution results for the Client. These factors include:
(a) Client’s investment profile/risk appetite
(b) Nature of the Client’s orders
(c) Client’s specific instructions relating to the trade execution (price limits, date limits, etc.)
(d) Time of receipt of orders compared to other orders
(e) Price of the stock(s)
(f) Speed of execution
(g) Likelihood of execution (in case of Client setting price or date limits)
(h) Size of the order
(i) Order Priority
(j) Market liquidity and impact of the order on the Market
(k) Any other relevant factors

2.2 The Client may instruct CICL to take into consideration certain factors which are more important to them. In the absence of Client’s specific instructions, CICL will exercise its own discretion to determine the relative importance of the factors and use all reasonable efforts to achieve best execution on behalf of our Client, while taking into account other factors that are not mentioned by the Client.

2.3 Subject to any specific Client instructions and/or local regulations, CICL will take all reasonable steps to maintain the confidentiality associated with Client’s filled and unfilled orders.

2.4 CICL has business continuity and disaster recovery plans in place for the purpose of maintaining client’s mandate or execution orders as well as effective staff and business survival capacity in the event of a disaster.

2.5 CICL does not owe Clients any fiduciary duties over and above the specific regulatory obligations placed upon CICL or as may be otherwise contracted between Client and CICL as a result of CICL’s commitment to provide Client with best possible execution results.

2.6 The Company will monitor the effectiveness of its order execution arrangements and Order Execution Policy with a view to identifying, and where appropriate, correcting any deficiencies. In particular, the Company will assess, from time to time, whether the execution principles in this Policy and the brokers and dealers to whom the Company transmits orders, allow the Company to achieve best execution on a consistent basis or whether the Company needs to make changes to its execution arrangements.

2.7 The Company will also review its order execution arrangements and Order Execution Policy annually and whenever a material change occurs that affects the Company’s ability to continue to achieve best execution on a consistent basis and where the principles included in this Policy have been employed.

2.8 The Company will notify clients of any material changes to its order execution arrangements or Order Execution Policy.