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NSE moves to ensure cordial brokers/ sub-brokers relationship

By on October 7, 2015

The Nigerian Stock Exchange (NSE) has made moves to facilitate an agreement between dealing member firms(stockbrokers), and Sub-brokers that will foster good working relationship and enhance   smooth securities transactions in the Nigerian capital market.

The NSE last June began implementation of a new rule that introduced sub-brokers as market operators, after the Securities and Exchange Commission (SEC) approved the rule on June 2, 2015.

The sub-broker framework was developed with a view to enhancing financial inclusion by attracting new entrants to the capital market particularly those based in remote, rural or semi-urban areas where investors are more likely to be less sophisticated and may not have access to modern technology infrastructure.

A sub-broker is expected to act on behalf of a dealing member as its agent for assisting investors in buying, selling or dealing in securities through such dealing member.

And to make sure there is a cordial working relationship between the dealing and sub-broker, the NSE yesterday unveiled an agreement template for them.

The agreement template spent out their rights and obligations among others. For instance,   the dealing member shall be responsible for the establishment of a complaints resolution mechanism between itself and the sub-broker for the clients.

The dealing member will also maintain a separate record including accounts in respect of the dealings in securities entered into on behalf of the ultimate client.

On the other hand, the sub stockbroker will ensure that its sponsored individual(s) shall be an associate member(s) of the Chartered Institute of Stockbrokers (CIS) or a first degree holder(s) in a relevant field and has an authorised clerk license from the NSE.

It will ensure compliance with the exchange’s rules and regulations governing dealing members and all capital market rules and regulations including the Know Your Customer requirements.

The sub-broker will equally maintain a separate record including accounts in respect of the dealings in securities entered into on behalf of the ultimate client. In addition, both parties shall ensure that the dealing member’s logo and the sub-broker’s logo should be reflected on all receipts, documents and other correspondences in respect of any securities transaction.

 

[ThisDay]