NSE proposes new rules to protect investors

The Nigerian Stock Exchange, NSE, has proposed a new rule aimed at protecting investors and attracting more participation in the nation’s capital market.

The proposed rule is titled ‘Rules and Regulations Governing Dealing members (Amendments and additions)’.

The Nigerian bourse has asked operators to review the rules and make appropriate contributions before they are harmonised and submitted to the Securities and Exchange Commission, SEC, for approval.

The new rules stipulates that each dealing member shall obtain the biometrics of all its individual clients and shall continuously update their records in that regard.

The rules, if approved, will mandate stockbroking firms to adopt a Know-Your-Clients (KYC) management procedures and render monthly financial statements to their clients.

In the area of KYC, the new rule stipulates that, “Each dealing member shall obtain the biometrics of all its individual clients and shall continuously update the records of all its clients in that regard”.

In cases of corporate entities, the dealing member is expected to obtain the corporate information of the company in addition to the biometrics of the authorised signatories to its share trading account.

Biometric identifiers obtained shall include finger prints and iris recognition and the information collected shall be applied towards confirming clients’ identities.

Furthermore, the dealing members would be required to render regular and prompt monthly financial statements to each of their clients by providing a detailed report of activities on the clients account, showing all transactions carried out on behalf of such client including all fees and other deductions and shall keep copies of statements provided to customers.

On complaints management, brokers are to establish and maintain an appropriate internal complaints management procedure as an initial point of dispute resolution with their clients.

The complaints areas of the provision of services, in which the client alleges to have suffered, or is likely to suffer financial prejudice as a result of the dealing member contravening or failing to comply with any instruction given by the client, or any agreement or mandate entered into with the client; contravening or failing to comply with the Exchange’s rules and directives; acting dishonestly, negligently or recklessly or treating the client unreasonably or unfairly are included in the new rules.