By Goddy Egene, 21 Feb 2011

 

The leadership of the stockbroking community in the nation’s capital market will this week meet with the management of the Securities and Exchange Commission (SEC) and Nigerian Stock Exchange (NSE) over the suspension of brokering houses and planned consolidation.

The NSE had one month ago suspended about 60 stockbroking firms while enforcing the N70 million minimum capital base requirement for dealing and broking firms as stipulated by the SEC since 2005.

While some of the firms have returned to the trading floor after complying, over 40 are yet to meet the requirement. The situation was worsened when the Director-General of SEC, Ms. Arunma Oteh, hinted that plans are on to reduce the number of broking from the 300 to a manageable size.

Although Oteh said the plan would be implemented in the second quarter and various strategies would be explored to achieve the objective, her pronouncement has caused anxiety among operators.

THISDAY checks revealed that in a bid to prevent these developments from degenerating into another crisis in the market, leadership of the Chartered Institute of Stockbrokers (CIS) and Association of the Stockbroking Houses of Nigeria (ASHON) will meet with SEC and NSE this week.

CIS is the professional body of stockbrokers, while ASHON is the body of owners of stockbroking firms in the country. Sources close to the two organisations confirmed the meeting to THISDAY last week, saying that  it is the first step deemed best to address the situation.

“We have notified SEC and NSE of our intention to meet with them and review the situation in the market. The suspension of broking firms and planned consolidation are very critical issues that are capable of determining the recovery of the market,” a source said.

It was gathered that the CIS and ASHON would make their position known at the meeting and give their advice on how to amicably resolve the issues without harming the market.

“We are in total support of  the improvement of the market but considering the fact that the market is just recovering from a major crisis,  care should be taken in every of our actions as operators and regulators so as not to plunge the market back into crisis. That is why CIS and ASHON have decided to meet the SEC and NSE,” the source added.

Oteh had hinted of the Commission’s moves to reduce the number of stockbroking firms, saying, “We know that something has to happen in our market. Three hundred broking firms is too large a number and they cannot be making money. I know that it is something that is difficult but we have to do something.”

However, a senior broker had advised against any forced consolidation, noting that if SEC enforced its rules properly, the number of operators would be reduced without heating up the system.

“It is something that can be done quietly without causing any panic in the market that is already heated up. SEC can achieve the consolidation by looking at the books of operators constantly and identifying those not meeting the financial requirements.

“Such operators can easily be eased out. We saw what the Nigerian Stock Exchange (NSE) did last month. Many of the brokers are still out there and those who cannot recapitalise will naturally go out of the business,” the broker explained.

Source: Thisday