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Stock brokers are endangered specie�Yussuf

By on March 26, 2011

Stock brokers who ply their trade on the floor of the Nigerian Stock Exchange (NSE) have cried out for help saying that they are now the endangered specie who are been suffocated by on-going reforms and regulations at the capital market.

Relaying this in Lagos Tuesday, President, Association of Stock Broking Houses of Nigeria (ASHON), Alhaji Rasheed Yussuf called for urgent actions to bail out stock brokers from dwindling business, insisting that “whatever assistance you have to give to get them back, you have to do that quickly”

The ASHON boss stated that problem of stock broking firms in Nigeria started with the apparent misunderstanding of the margin loan facilities by the regulatory authorities as the entire burden of margin loan was heaped on the door steps of brokers as opposed to the prescribed margin that they should bear.

“What has impacted negatively on the brokers is the way authorities have treated margin loan. There is no proper understanding of the margin loan issue. It is presently assumed that if your liability in the margin loan is 30 percent, you are made to provide for your 30 percent as well as the remaining 70 per cent. Brokers� balance sheet has been overburdened by this misunderstanding. Let us resolve this margin loan issue ones and for all”

Yussuf who has looked on Asset Management Company of Nigeria (AMCON) for a better understanding of the margin loan provisioning said that he hoped that AMCON will give a better interpretation of the margin loan provisioning to the authorities as this will pave way for better operating environment for stock brokers.

While maintaining that the stock broking community is critical sector of the nation�s economy, Yussuf said that in some advanced economies, when a sector as sensitive as stock broking has identified problems, a programme of action would be put in place to bail it out, bearing in mind that stock brokers are major drivers of their economy.

Regretting that such bailout instruments have not been put in place for brokers in the country, Yussuf said “you must have a vibrant stock broking community, for your economy to be vibrant. We have not done what is required to empower them when they are down. This is a pivotal sector and you have to do certain things to get them back. We are expecting that none of our members will eventually leave the market. There are so many roles to play and we are exploring all of them.

“It however depend on the market, the market has to be up and doing to afford you the required opportunity to play that divergent roles. It will be a disservice to the economy for this highly intellectual and knowledgeable sector to be easily wished away. However If in future they don�t play the role they are playing now, there are still many roles they are required to play in the capital market”

Speaking on the prevailing bearish run at the capital market which has drastically reduced market vibrancy and activity of the stock brokers, Yussuf said “Our expectation before is that maybe the market will reverse its self early, but that has not happened, we are not wasting away, we are repositioning for rebounding of the market so that when this eventually happens, the broker will have a bigger role to play”

He said that for stock brokers to be dormant in the present dispensation of things would also be translated that the economy as well is stagnant, maintaining that brokers help to mobilize savings through the capital market for industries to come and raise at low rate, where the savings are not mobilized, according to him means that the industries are in comatose and this invariably portend danger for the economy.”We mobilize savings and we believe that what is presently happening is temporary setback” the ASHON boss hinted.

Source : Daily Champion