SECURITIES and Exchange Commission, SEC has advised the investing public and public companies to verify the compliance status of their preferred operators, warning that any operator that fails to comply with the September 30 deadline to recapitalise will cease to operate in the Nigerian capital market.
SEC in a notice at its website confirmed 304 capital market operators with valid status and 188 operators with incomplete registration.
To facilitate the smooth implementation of the new minimum capital requirements for the operators, the Capital Market Committee, CMC, comprising the SEC, the Nigerian Stock Exchange, NSE, Central Securities Clearing System, CSCS, the Association of Stockbroking Houses of Nigeria, ASHON, and all other capital market trade groups.
However, SEC in the notice said the current list may change because some operators are in the process of injecting additional capital, seeking reduction or reclassification of functions, as well as undergoing mergers and acquisitions.
The apex capital market regulator, which has insisted on September 30 this year as the recapitalisation deadline, said affected operators would only have to apply for fresh registration to operate in the capital market.
The capital market operators include Corporate Investment Advisers, Solicitors, Reporting Accountants, Issuing Houses, Receiving Bankers, FMDQ OTC Dealers, Broker/Dealers, Registrars, Fund /Portfolio Managers, Rating Agencies, Trustees, Underwriters, Custodians, and Venture Capital Managers.
This comes on the heels of the decision by SEC to prohibit brokers from proprietary trading post-recapitalisation, saying brokers’ proprietary accounts at the CSCS would be blocked. Rather, they would only be allowed to maintain investment accounts with other firms (broker or broker dealer).
This regulatory decision applies to market operators who choose to reduce their number of registered functions to recapitalise, after withdrawing SEC’s registered function. For example, Broker/Dealer to Broker or Dealer; Issuing House and Fund/Portfolio Manager to Issuing House, among others.
In the capital market, proprietary trading occurs when a trader trades stocks, bonds, currencies, commodities, their derivatives, or other financial instruments with the firm’s own money, as opposed to depositors’ money, so as to make a profit for itself.
Also, dealers are prohibited from maintaining client accounts.
SEC said dealers would be required to notify all clients to transfer their accounts to another firm (Broker or Dealer) of their choice within 14 days.
According to the commission, the operators should note that conversion/migration to any of the options is not automatic, as routine regulatory requirements must be fulfilled.
Under the revised minimum capital requirements regime, the minimum capital base for Broker/Dealer was increased by 328.6 percent from N70 million to N300 million, while a broker, that currently operates with a capital base of N40million, will now be required to have N200 million, an increase of 400 percent.
Likewise, the minimum capital requirement for the dealer has increased by 233.33 percent from N30 million to N100 million.
Issuing houses that arrange for a company’s shares to be sold on a stock market are required to have minimum capital of N200 million, as against the current capital base of N150 million, an increase of about 33.33 percent. Also, capital requirement for underwriters was increased by 100 percent from N100 million to N200 million.


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