The Nigerian Stock Exchange has warned dealing member firms against violating client account management guidelines.

According to the NSE, operators that violate the guidelines will be suspended from trading activities, in addition to being fined.

This was contained in a circular to all dealing firms, which was entitled, ‘Maintenance and segregation of client account.’

In the circular, signed by the Head, Broker Dealer Regulation, Olufemi Shobanjo, and posted on its website, the NSE reminded the firms that pursuant to Article 13 of the Rules and Regulations Governing Dealing Members, every dealing member is required to “keep all monies held on behalf of clients in a bank account separate from its own monies.”

It added that the rules required dealing members to “hold such accounts in the name in which the dealing member carries on its stock-broking business followed by the words “Clients’ Account.”

As a result of this, it said each dealing member was required to maintain a trading/settlement account, firm’s current account, and clients’ current account.

The NSE warned that dealing members that failed to comply with the guidelines would be punished under regulatory sanctions prescribed in section 5 (a) of Policy No 01 NSE.

The policy states, “Failure of a dealing member to keep and hold all monies on behalf of clients in a bank account separate from its own monies shall attract an immediate penalty of suspension from trading until such account is opened and evidence of maintaining the account is submitted to the Exchange and a fine of N500,000 (is paid).”

The NSE and the Securities and Exchange Commission have taken a tough stance on capital market infraction in recent times with erring firms, operators and quoted companies facing stiff sanctions.

The Director-General, SEC, Ms. Arunma Oteh, has reiterated the commission’s commitment to its zero tolerance policy for sharp practices over time, while the Chief Executive Officer, NSE, Mr. Oscar Onyema, has worked towards strengthening corporate governance and encouraging transparency in the capital market.

Source: Punch (by Simon Ejembi)