Investors have been advised by the implementation committee on the new minimum capital requirement for capital markets operators (CMOs) to verify the status of their CMO by checking the list of stockbroking firms that met the deadline.
A list on the website of the Securities and Exchange Commission (SEC) showed that about 97 per cent of operators met the deadline on September 30.
A statement signed by the committee secretary and posted on the website listed guidelines for investors, target firms, and the Central Securities Clearing System (CSCS).
The list provides advice for an investor who wishes to move his stock account from an under-capitalised broker/dealer to a broker/dealer or broker who has complied with the minimum capital requirement.
“Where the broker/dealer has not met the new minimum capital requirement, the investor should approach a capitalised broker/dealer or broker for engagement. The investor should undergo a Know Your Customer (KYC) process with the new firm,” the statement advised.
“The broker/dealer or broker should open a CSCS account for the investor using the investor’s existing Clearing House Number (CHN) from his former brokerage firm.
“The investor should give a mandate to the target firm to transfer his/her account from the under-capitalised firm to the target firm (capitalised firm).
“The investor should submit evidence of purchase of the shares such as contract notes, receipts of purchase, dividend stubs or confirmation of holdings from the registrar’s office, signed by the managing director of the registrar firm to the target firm.
“The target firm (capitalised firm) should initiate inter-member transfer request. The managing director of the target firm (capitalised firm) shall go to the CSCS to sign off the indemnity form.
“The CSCS shall process the request and notify the broker/dealer or broker through the CSCS website.”
Up to 437 out of the total 449 registered CMOs met the deadline when capital verification was conducted on September 30.
The SEC listed four operators processing merger applications approvals and court sanctioning.
Investigation showed that 30 brokers and 174 broker/dealers have complied.
Association of Stockbroking Houses of Nigeria (ASHON) Chairman, Emeka Madubuike, expressed delight over the number of stockbroking firms that have complied.
His words: “The minimum capital base started with over 211 active stockbroking firms. As at the ending of the deadline, 206 have complied.
“We are delighted over the level of compliance. It is time for us to look into the future and strategise on how to do business in the capital market.
“The level of stockbroking firms’ participation also shows the level of confidence in the capital market because the expectation was that so many firms were not going to comply.
“But that is not the case. We are happy that it is over and it is time to settle down and do business.
The SEC announced in 2013 new minimum capital requirements for all categories of market operators pursuant to Section 313(6) of the Investments and Securities Act (ISA) 2007.
It increased minimum capital base for
• Broker/dealer, from N70 million to N300 million (329 per cent).
• Broking firm, N40 million to N200 million (400 per cent).
• Dealer, from N30 to N100 million (233 per cent).
• Issuing houses (facilitators of new issues in the primary market), from N150 million to N200 million (33 per cent).
• Underwriter, from N100 to N200 million (100 per cent).
• Share registration company, from N50 to N150 million (200 per cent).
• Corporate investment adviser, remains at N5 million.
• Individual investment adviser, from N500,000 to N2 million (300 per cent).
The CMC set up a market-wide Implementation Committee on New Minimum Capital Requirement for CMOs comprising the SEC, Nigerian Stock Exchange (NSE), CSCS, ASHON, and other capital market trade groups to facilitate implementation of the new rules.
