Tuesday 5 January 2016

Securities and Exchange Commission (SEC) sacks 24 firms from capital market; ...re-validates 429

Securities and Exchange Commission (SEC)
The Securities and Exchange Commission (SEC) yesterday disqualified 24 Capital Market Operators (CMOs) for noncompliance and/or the inability of the audit firms to substantiate their claims of compliance.

A list uploaded to the SEC website after capital verification has been conducted showed that 429 CMOs adhered to the minimum requirements while 24 others were disqualified.

Efforts to obtain names of the disqualified CMOs were not successful as a source at SEC, who pleaded anonymity, said that the regulator will not be able to release the list due to the present sensitive nature of the market, as such might further erode investors’ confidence and trigger more sell-off of shares.
“In exercise of the powers conferred on it by the Investment and Securities Act (ISA) 2007, the Securities and Exchange Commission hereby releases the list of Capital Market Operators that complied with new minimum capital requirement after capital verification exercise,” the apex regulator said in the circular.
This list, it further said, “was based on the consideration of the reports on capital verification and the responses received from the affected Capital Market Operators (CMOs).
“In all, 24 CMOs were disqualified for non-compliance and/or inability to substantiate claim of compliance based on queries raised by the audit firms. In addition, 16 new CMOs were added on the list, 10 of which were newly registered companies and six filed evidence of compliance after the release of provisional list which were verified and accepted.”
To facilitate the smooth implementation of the new minimum capital requirements for CMOs, the Capital Market Committee (CMC) set up a market- wide Implementation Committee on New Minimum Capital Requirement for CMOs comprising SEC, the Nigerian Stock Exchange (NSE), the Central Securities Clearing System (CSCS), the Association of Stockbroking Houses of Nigeria (ASHON) and all other capital market trade groups.

Given the transformation on-going in the capital market, with increased volume of transactions, the board of SEC, under the leadership of the past Director General, Ms. Arunma Oteh, in pursuant to section 313(6) of the Investments and Securities Act (ISA) 2007, on December 19, 2013, issued a new capital requirement for capital market operators with December 31, 2014, as deadline for operators to recapitalize.

Due to persistent bearish trend in the market, the deadline was further extended to September 30, 2015. Following the amendments, the capital requirement for broker/dealer was increased from N70 million to N300 million.

For broker only, the capital requirement was increased from N40 million to N200 million, while for dealer; it was raised from N30 million to N100 million.

The minimum capital requirement for Issuing House was also increased from N150 million to N200 million while that of underwriter went up from N100 million to N200 million.

For a registrar in the Nigerian capital market, the minimum capital requirement rose to N150 million from N50 million, while the capital requirement for those in trustee business was raised to N300 million from N40 million.

Furthermore, the minimum capital requirement for rating agency was increased from N20 million to N150 million, while the capital requirement for corporate investment adviser remains N5 million.

From an initial capital requirement of N500,000, every individual investment adviser is expected to have at least N2 million as capital, while fund/portfolio manager’s minimum capital requirement has been raised from N20 million to N150 million.

The development received a public outcry as most stockbrokers faulted the move, suggesting that the stock broking firms’ minimum capital should be determined by the level of business they want to do.

Credit: New Telegraph

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