The Nigerian Stock Exchange (NSE) has proposed a total of N17.9 million as fees for obtaining dealing membership license and operating a stockbroking firm in the nation’s capital market.

These fees are however, outside the N70 million minimum capital requirement stipulated by the Securities and Exchange Commission (SEC).

According to draft guidelines by the NSE, obtained by THISDAY last week, the NSE is proposing that any company wishing to be registered as its dealing member  would have to pay  N15 million dealing membership license fees; N1 million contribution to Investment Protection Fund; N780,000 Automated trading System (ATS) trading engine; N995,000 ATS Trading System upgrade;  N100,000 Trade Guaranty Fund  and N25,000 Central Securities Clearing System (CSCS) eligibility fee.

THISDAY checks revealed that  the proposal was  exposed  to the chief executive officers of stockbroking firms last week for  their contributions before it would be adopted in the market.

Market sources said that the brokers were given up to February 24, 2012 to make their contributions.

It was gathered that before now, there were no specific guidelines   for  the registration of stockbroking firms.

A senior stockbroker told THISDAY that while it was commendable to issue the guidelines, the fees aspect of   the guidelines should be well examined by the Exchange, given the prevailing condition of  the market.

“Before now, there was nothing like fees for dealing membership license. Once you  qualified as dealing member (stockbroker), you  just pay some fees that altogether was below N3 million. The aspect of the fees should be looked into very critically,”  the broker said.

Specifically, the exchange stipulated that any organisation wishing to be licensed as its dealing member must apply and be duly licensed in accordance with the relevant laws including:

Investment and Securities Act (ISA); SEC Rules and Regulations, rules and regulations governing exchange dealing members  and other relevant rules and regulation governing the capital market.

“Application for a license of a dealing member to transact business as a stockbroker shall be made in the prescribed manner as determined by the exchange. Application for a license shall be made to the council of the exchange. After meeting the requirements for the grant of a dealing member license, an Approval-In-Principle (AIP) will be granted to the applicant, and this shall be valid for three months only,” the exchange said.

According to the guidelines, any organisation applying for a Dealing Membership License  must be a duly incorporated limited liability company in Nigeria under the Companies and Allied Matters Act, Cap. C20 LFN 2004; shall not engage in any business other than trading in securities listed on The Exchange; have the professional and technical capacity to manage the business of securities trading among others.

Source: ThisDay/Goddy Egene