By Peter OBIORA investadvocate

Jan 20 2010 16.10 GMT

 

Lagos (INVESTADVOCATE)-The Dealing Member firms suspended from operating by the Nigerian Stock Exchange Tuesday January 18 2011 on the grounds of inadequate Shareholders Funds can now appoint other Dealing Members Firms to execute mandate on their behalf.

 

This was contained in a Statement Thursday January 20 2011 by Nigeria’s Exchange and made available to investadvocate in Lagos Nigeria.

 

Emmanuel Ikazoboh, Interim Administrator of the NSE in the Statement affirmed that the Exchange has issued a Circular same Tuesday January 18 2011 to remind all suspended Dealing Members Firms of their duty to instruct and appoint another stockbroker to carry out the mandate they had gotten from their clients prior to their suspension to ensure the security of clients of the suspended firms.

 

“On the security of clients’ investment, The Exchange on January 18, 2011 issued a circular to remind all suspended Dealing Members Firms of their duty to instruct and appoint another stockbroker to carry out the mandate they had gotten from their clients prior to their suspension” the Statement said.

According to Ikazoboh, the Circular was in line with the Article 57 (d) of the Rules and Regulations Governing Dealing Members which provides that: “The Dealing Member shall be under a duty to instruct and appoint another Dealing Member to carry out any instructions already received by it on behalf of its clients prior to suspension and shall immediately notify The Exchange in writing of such appointment. Most of the affected firms have complied with this” he said.

The Nigeria’s Exchange Interim Administrator further affirmed that the Circular informed the affected Firms that The Exchange would not tolerate any complaint received against any Dealing Member Firm for failing to carry out instruction received by the them prior to the suspension.

Ikazoboh said that the above notice was inline with section ‘e’ of the same Article 57 ensures that: “The Dealing Member shall do everything possible to ensure that its innocent clients do not suffer any loss or embarrassment as a result of the suspension” he said.

“It was unfair for any of the affected Stockbroking Firms to claim that the new Capital Base was suddenly imposed on them, stressing that the Securities and Exchange Commission (SEC), the Apex Regulator of the Nation’s Capital Market, had since December 2005, raised the minimum share capital for Stockbroking Firms from N20 million to N70 million” Ikazoboh said .

“Since 2005, this has been fixed and Operators were expected to have complied with this long ago. We believe this is the right thing to do in the interest of investors, the Market and the Nation’s Economy as a whole. We want to gain back investors confidence in the Carket and one of the ways of doing this is to ensure that all rules put in place are obeyed by all” the Interim Administrator affirmed.

According to him, nowhere in the world is capital inadequacy tolerated and Nigeria would not be an exception.  “In some Exchanges when your Capital adequacy is getting to a point, they step in immediately, but in our case we have a situation where the Capital Base of some Companies is completely eroded. We cannot continue like this’, Ikazoboh said.

Meanwhile, the NSE has assured investors who are clients of the Stockbroking Firms suspended by it of safety of their investments.

From the Nigeria’s Exchange website, 57 Dealing Member Firms were on Tuesday January 18 2011 suspended on the grounds of inadequacy of Shareholders Funds.