By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-Nigeria’s Securities and Exchange Commission (SEC) on Sunday said 437 capital market operators (CMOs) has met the recapitalisation deadline as it advised investors to verify compliance status of their preferred CMOs by checking the list posted on the Commission’s website.
The advice came from the Market-wide Implementation Committee on new minimum capital requirement for CMOs, according to SEC in a statement signed by the Secretary of the Committee and posted on SEC website.
Apart from the 437 CMOs that met the recapitalisation deadline, SEC disclosed that there were four (4) merger applications pending before it.
SEC listed some guidelines that should be adhered to by investors, target firms and the Central Securities Clearing System (CSCS) where an investor wishes to move his stock account from an under-capitalised Broker/Dealer to a Broker/Dealer or Broker that has complied with the minimum capital requirement (capitalised firm).
“Where the Broker/Dealer has not met the new minimum capital requirement, the investor should approach a capitalised Broker/Dealer or Broker for engagement: The investor should undergo a Know Your Customer (KYC) process with the new firm,” SEC said.
“The Broker/Dealer or Broker should open a CSCS account for the investor using the investor’s existing Clearing House Number (CHN) from his former Brokerage Firm, The investor should give a mandate to the target firm to transfer his/her account from the under-capitalised firm to the Target firm (capitalised firm), and the investor should submit evidence of purchase of the shares such as contract notes, receipts of purchase, dividend stubs or confirmation of holdings from the Registrar’s office, signed by the managing director of the Registrar firm to the target firm,” the Commission added.
According to SEC, other aspects of the guidelines provides that the Target firm (capitalised firm) should initiate inter-member transfer request, the MD of the Target firm (capitalised firm) shall go to the CSCS to sign off the indemnity form and the CSCS shall process the request and notify the Broker/Dealer or Broker through the CSCS website.
On December 18, 2013, Nigeria’s SEC announced new minimum capital requirements for all categories of market operators in pursuant to Section 313(6) of the Investments and Securities Act (ISA) 2007.
The Commission further affirmed that to facilitate the smooth implementation of the new minimum capital requirements for operators, the CMC set up a market-wide “Implementation Committee on New Minimum Capital Requirement for CMOs,” comprising the SEC, Nigerian Stock Exchange (NSE), Central Securities Clearing System (CSCS), Association of Stockbroking Houses of Nigeria (ASHON) and all other capital market trade groups.
A breakdown of the new minimum capital requirement for CMOs shows that Broker/Dealers are expected to shore up their capital base to N300 million from N70 million.
Brokers from N40 million to N200 million, dealers from N30 million to N100 million, issuing houses from N150 million to N200 million and underwriters from N100 million to N200 million.
Others are registrars from N50 million to N150 million, trustees N40 million to N300 million, rating agencies from N20 million to N150 million, while that of corporate investment advisers still stands at N5.0 million.
