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Capital adequacy: 24 stockbroking firms fail to make SEC’s final list

By on January 5, 2016

Twenty-four stockbroking firms failed to make the final list of capital market operators (CMOs) that met the new minimum capital requirement stipulated by the  Securities and Exchange Commission (SEC).

SEC had in 2013 announced a new minimum capital requirement for all categories of market operators in pursuant to Section 313(6) of the Investments and Securities Act (ISA) 2007. The compliance deadline expired September 30, 2015 while SEC released a provisional list showing that 437 operators met the capital requirement. The commission then engaged 16 accounting firms for capital verification exercise.

THISDAY gathered that at the end of the verification exercise, 24 stockbroking firms were dropped from the provisional list. However, the commission did not disclose the names of the firms.
According to a statement posted on its website last night titled: “List of Capital Market Operators that complied with the new minimum capital requirement after capital verification exercise”, SEC said the list was based on the consideration of the reports on capital verification and the responses received from the affected CMOs.
“In all, 24 CMOs were disqualified for non-compliance and/or inability to substantiate claim of compliance based on queries raised by the audit firms. In addition, 16 new CMOs were added on the list, 10 of which were newly registered companies and six filed evidence of compliance after the release of provisional list which were verified and accepted.”

SEC increased the  minimum capital base for broker/dealer by 329 per cent from the existing N70 million to N300 million. A broking firm which operated with capital base of N40 million, now has N200 million, representing an increase of 400 per cent.
While the minimum capital for dealer was raised by 233 per cent from N30 to N100 million, that of issuing houses (facilitators of new issues in the primary market) was increased to N200 million from N150 million. The capital requirement for a company to underwrite issues was also raised from N100 million to N200 million, just as share registration companies now have to raise their capital base from N50 to N150 million. The minimum capital for corporate investment advisers was however retained at N5 million, unlike individual investment advisers who would only operate with a 300 per cent hike in capital base from N500,000 to N2 million.

 

[ThisDay]