Friday, 9 November 2012


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.
 An investigation on the affected stockbroking firms is said to have revealed that they had their shareholders funds eroded as at September 30, this year.
 The Stock 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.
 The dealing 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.
 The three 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).
 The Federal 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 N50 million.

Tags: Nigerian Stock Exchange ,  stockbroking firms ,  shareholders funds ,  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,  Mainstreet Securities Limited ,  Afribank Securities Limited

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