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Recapitalisation: Over 60 market operators may lose licences

By on October 1, 2015

As the deadline set by the Securities and Exchange Commission for capital market operators in the country expires on Wednesday (today), it is expected that more than 60 operators will lose their operating licences.

As of Tuesday, 384 market operators had met the new minimum requirement with 36 others processing reclassification of their functions and another 12 processing mergers. This means 432 operators are expected to survive the exercise.

Data obtained from the SEC website showed that there were 304 operators with complete registration and 188 others with expired or incomplete registration in the market, making a total of 492 operators as of September 7.

The commission could not be reached to give an exact figure for the sum of operators in the market, but some operators have said the figure could be way above 500, insisting that up to 100 operators could lose their licences.

Based on the SEC figures, 60 operators are likely to have licences withdrawn should no other operator meet the deadline on Wednesday.

Data obtained from the Nigerian Stock Exchange’s website showed that there were 49 inactive dealing members as of Monday, September 28 with 220 active dealing members.

The Exchange had in August hinted that it was in the final process of expelling 15 inactive stockbroking firms and it is expected that the inactive members would all lose their licences following the recapitalisation exercise.

Asked about the expected outcome for stockbroking firms with the deadline looming, the President, Association of Stockbroking Houses, Mr. Emeka Madubuike, said it was expected that up to 200 of the firms would meet the deadline.

Madubuike, who noted that he did not have figures for the total number of operators in the market, said, “We have about 220 active firms and we reckon that by the time the exercise would be rounded off Wednesday in different stockbroking classification, we should have between 180 and 200.”

According to Madubuike, such figures represent significant level of compliance and showed that stockbroking firms have shown a desire to move the market forward.

“I think that what has happened is that people have really looked at the future of the market even though things are difficult now. It just indicates that there is a lot of hope and people (operators) have decided to dig deep and either raise capital or reclassify so that they can operate at the level which their capital can carry,” he said.

Meanwhile, the SEC is expected to hold a meeting on the exercise on Wednesday and provide details of its outcome afterward.

The commission had announced the new minimum capital requirements for operators in December 2013, fixing December 31, 2014 as the deadline for compliance.

It, however, shifted it by nine months to September 30, 2015 in response to calls by operators for an extension.

Under the new minimum capital base, the capital requirement for brokers/dealers was increased from N70m to N300m. That of brokers was raised to N200m from N40m, while that of dealers was hiked to N100m from N30m.

The minimum capital requirement for issuing houses was increased from N150m to N200m, while that of underwriters was raised from N100m to N200m. Registrars saw their minimum capital requirement increased to N150m from N50m, while the requirement for trustees was increased to N300m from N40m. Rating agencies were not left out as their minimum capital requirement was increased to N150m from N200m.

 

[Punch]