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N300m capital: Stockbroking firms consider new compliance strategies

By on October 2, 2014

Stock-broking firms are considering fresh strategies to comply with the new capital base requirement as the December 31, 2014 deadline draws closer, THISDAY checks have revealed.

The Securities and Exchange Commission (SEC) had at the beginning of this year announced a new share capital for operators in the capital market. Share capital of stockbroking firms was increased from N40 million to N200 million while that of broker/dealer was raised from N70 million to N300 million. They had been given December 31, 2014 as compliance date.

Although the leadership of the stockbroking community has protested the increase and asked SEC to review the policy, the regulator has stuck to its decision.

However, three months to the expiry of the deadline, stockbrokers are considering new strategies to comply. While some are thinking of outright sale of their licences, others are thinking of mergers.
“I have been hoping that SEC will give us more time to comply since it has refused to consider our plea to review the policy. But from every indication, it is obvious that the regulator has made up its mind. We are therefore considering various options. In our own case, if by October ending we do not have a merging partner, we have to sell our licence to any willing buyer,” the chief executive officer of a stockbroking firm located on the broad street, Lagos said on Monday.

Chairman of Association of Stockbroking Houses of Nigeria (ASHON), Mr. Emeka Madubuike, who confirmed this development to THISDAY, noted that they are still calling on SEC for a  meeting  sit down and take another look at the policy before the deadline expires.

According to him, they believe in constructive engagement as a way forward on the policy, noting that ASHON and Chartered Institute of Stockbrokers (CIS) have written to the management of SEC.

“When we have policy like that is going to affect people’s livelihood,  the only thing we believe will happen is  constructive and continuous  engagement to ensure  that even if the policy will stay,  it  is applied in  such a way that it will be in the interest of market and  there will be no or minimal collateral damage,” he said.

Although SEC has not considered their request for a meeting for over  eight months, the ASHON boss expressed confidence that  there is still time for the meeting.

“We think there is still time to do that. We will continue to make this request from the regulator to let us sit down and talk. Look at this policy. Look at the best way to implement it in the interest of the entire market and the economy of the country.  We will continue to make efforts to see whether it is possible as the deadline draws nearer,” he said.

According to Madubuike, one of the options operators are looking at is mergers and acquisitions.
“This is   one of the reasons it is good for us to constructively look at things that can be done to make sure it works out. If the whole objective is to send as a many people as possible out of the market, I do not think that is what the market requires as we speak. You know are dealing with issues of unemployment that will come, we are dealing with issues of financial illiteracy that still bedevils our country, we are still dealing with financial inclusion and we are approaching an election year. This is not the time to bring policies that will cause upheavals in any part of our financial system.

For all of these reasons, it is necessary we engage to take a look at this policy to see how it will be implemented. Every policy that is put in place, you carry along the people that will implement the policy to ensure that the objectives of the policy are achieved and the interests of the all stakeholders are taken into account,” Madubuike declared.

 

[This Day]