NSE may expel 81 stockbrokers, revoke dealing licences

By IAfrica
In Nigeria
Aug 3rd, 2014
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• Stockbrokers in emergency meeting

The Nigerian Stock Exchange (NSE) is taking  the hoe to weed out more than one-quarter of stockbroking firms as the Exchange seeks to implement stricter minimum operating standards.

The Nation learnt that the NSE is seeking to amend the rules governing its dealing members, in a move that will empower the NSE to delist as many as a quarter of stockbroking firms on its membership list.

Stockbrokers met on Saturday at an emergency meeting to discuss the emerging developments at the Exchange, including the new minimum operating standards.

The draft amendment to the rules and regulations governing dealing members, is titled, ‘Revocation of Inactive Dealing Member Firms’ licences’ and it has already passed the initial rule-making processes.

The amendment is currently undergoing  stakeholders’ review after which it will be passed to the Securities and Exchange Commission (SEC) for final approval.

The Nation’s investigation indicated that the NSE has already determined that 81 out of the 322 stockbroking firms on its dealing members’ list are inactive.

Sources said the amendment is the much-needed hoe that the Exchange, which has raised concerns about several stockbroking firms in past, would use to weed out illiquid and inactive stockbroking firms.

According to the amendment, where a dealing member is inactive for a period of six consecutive months, the Exchange shall revoke the license of the dealing member. A dealing member must not, under no circumstances cease to carry out its day-to-day business activities for which it was licensed to operate without any reasonable cause.

The document indicated that a dealing member may be deemed inactive voluntarily and involuntarily.  Voluntary inactivity occurs where the firm has not recorded any trading activity without being suspended by the Exchange or SEC. Involuntary inactivity occurs where the firm has been suspended by the NSE, or  SEC for any infraction.

Where a firm has been voluntarily, or involuntarily inactive for six months, the Exchange shall exercise its discretion in determining whether to revoke the firm’s dealing licence.

“Where the Exchange revokes a dealing member’s license, The Exchange shall immediately commence the process of expelling such dealing member,” the report indicated.

Besides, another amendment also seeks to empower the council of the NSE to suspend any authorized clerk or revoke the registration of any authorized clerk who has breached any rules or regulations of the Exchange or is found to be complicit in any breach of such rules or regulations.

Also, under the new amendments, suspension of any stockbroking firm by SEC will lead to immediate suspension by the NSE while revocation of any broker’s registration will lead to expulsion of the firm by the NSE.

The firms that may be affected by the new revocation and expulsion clauses included Al-Pina Investment and Trust Company Limited, BBL Asset Management Limited, Integrated and Allied Securities Limited, MultiTrust Securities Limited, Standard Chartered Securities Limited, Trans Lux Services Limited, Mainstreet Bank Securities Limited, First Atlantic Securities Limited, AAA Securities Limited, Alliance Capital Management Company Limited, BFCL Asset & Securities Limited, and Afro-Arab Investment Limited.

Others included Arian Capital Management, Barakat Investment Limited, BIC Securities Limited, CEB Securities Limited, Colvia Securities Limited, Consolidated Investment Limited, Dakal Services Limited, Decanon Investment Limited, Empire Securities Limited, Enabell Capital & Investment Limited, Epic Investment Trust Limited, Equator Stockbrokers Limited, First Equity Securities Limited, First Express Limited, Folu Securities Limited, Genesis Securities & Investment Limited, Ideal Securities Limited, Indemnity Finance Limited, Integrated & Allied Securities Limited, KFF Worldwide Solutions Limited, Kingdom Securities Limited, Lion Stockbrokers Limited, LMB Stockbrokers Limited, Maninvest Asset Management Plc, Mayfield Investment Limited, Metropolitan Trust Nigeria Limited, Midland Capital Markets Limited, Midlands Investment & Trust Limited and ML Securities Limited.

Others included Monument Securities & Finance Limited, MultiTrust Securities Limited, Omas Investment & Trust Company Limited, Peninsula Asset Management & Investment Company Limited, Platinum Capital Limited, Professional Stockbrokers Limited, Prudential Securities Limited, Regency Financing Limited, RIV Trust Securities Limited, Riverside Trust Limited, Securities Trading & Investment Company Limited, Sikon Securities and Investment Trust Limited, Trans Lux Services Limited, Transglobe Investment & Finance Company Limited, Tropics Securities Limited, Truebond Capital & Asset Management Limited, WT Securities Limited, Wema Asset Management Limited and Zuma Securities Limited.

 

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