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Friday, 9 November 2012
STOCK EXCHANGE SUSPENDS 21 BROKERS WITH
INADEQUATE SHAREHOLDERS FUNDS
Twenty-one stockbroking firms have been suspended
from the Nigerian Stock Exchange (NSE) for failing to meet the statutory
requirement of maintaining a minimum liquidity margin of not less than 10
percent of shareholders funds.
Article 15(e) of the rules and regulations governing
dealing members, requires stockbroking firms at all times to maintain a
liquidity margin of not less than 10 percent of their shareholders’ funds.
on the affected stockbroking firms is said to have revealed that they had their
shareholders’ funds eroded as at September 30, this year.
Exchange, in its ‘BrokersTrak’ identified the stockbroking
firms with inadequate shareholders funds, as including Colvia Securities
Limited, Consolidated Investment Limited, Dakal Services Limited, DBSL
Securities Limited, Dependable Securities Limited, Empire Securities Limited,
Express Discount Asset Management Limited, First Equity Securities Limited,
Genesis Securities & Investment Limited, Gombe Securities, Lion
Stockbrokers Limited, LMB Stockbrokers Limited, and Mainstreet Securities
Limited (Formerly Afribank Securities Limited).
Others suspended for maintaining inadequate
shareholders fund, are Mayfield Investment Limited, Midland Capital Market
Limited, Peninsula Asset Management & Investment, Professional Stockbrokers
Limited, Securities Trading & Investment Limited, Supra Commercial Trust
Limited, Wema Asset Management Limited, and Woodland Capital Market Plc.
One of the reasons stockbrokers were badly hit at
the peak of the equities market crisis, was poor capitalization. To remain in
business, a good number of them had to secure margin loans, and as the market
slumped, banks had to call back those facilities, leaving them liquid.
This development comes on the heels of the summoning
by the NSE, of 18 dealing member firms and three individuals, said to have been
involved in unauthorized sale of investors’ shares between January and
September 30, 2012.
The NSE, in a
bid to improve investor confidence in the market, has commenced a strong
campaign against market infraction by its dealing members. “Investors can now make more informed decisions about
where to invest, by viewing names of Dealing Member-Firms that have been found
liable for contravening market rules. The aim of the NSE is to reduce
contravention of market rules to the barest minimum, while doing all within its
means to restore confidence” the Broker-Dealer Regulations of the NSE said.
member firms (both resolved and unresolved) which have been summoned, include
Manivest Asset Management Limited, IT IS Securities Ltd, Lion Stockbrokers
Limited, Securities Solutions Limited, Dominion Trust Limited, Omas Investment
and Trust Limited, Marriot Securities Limited, Mountain Investments and
Securities Ltd, Royal crest Securities Ltd, Gosord Securities Ltd, Bytofel
Trust and Securities Ltd, Nova Finance and Securities Ltd, WT Securities Ltd,
GMT Securities and Assets Management Ltd, Prime Wealth Capital Ltd, Maven Asset
Management Ltd, and Da-Canon Investment Ltd, as well as Adamawa Securities Ltd.
individuals whom the NSE said have been involved in unauthorized sale of
investors’ share between January and September 30, 2012 are
Kingsley Nnaji (Hass been blacklisted by the Exchange for misconduct); Jeol
Okafor (He has been referred to the disciplinary committee of the council) and
Okafor George Nchedo (He is currently under investigation for misconduct).
Government had in April 2007 announced a new capital base of between n1 billion
and N2 billion for the various categories of operators in the market. While Issuing
Houses were to increase their capital base to N2 billion from N150 million,
stock broking firms were directed to shore up theirs to N1 billion, from N70
million and Registrars were to increase their capital base to N500 million from