Quarterly Returns: NSE Reads Riot Act to Brokers

21 Mar 2012

Views: 1,993

Font Size: a / A

b2262011-oscard-onyema.jpg - b2262011-oscard-onyema.jpg

DG, NSE,   Oscar Onyema

By Goddy Egene

The management of the Nigerian Stock Exchange (NSE) has handed down a two-week ultimatum to stockbroking firms to render their quarterly returns or face suspension from trading on the floors of the Exchange.

THISDAY checks revealed that the ultimatum was given by the Chief Executive Officer of the NSE, Mr. Oscar Onyema last week, saying that the Exchange would no longer compromise in the enforcement of market rules going forward.

Stockbroking firms are required to render returns to the Exchange as part of the new policies introduced to sanitise the market and make it more attractive to investors. The returns, which are made quarterly and yearly, are in form accounts, stating the financial position of the broking house, including its income, expenditure among others.

Some broking houses were suspended last year for failure to render their returns. Onyema was quoted to have said that the Exchange would soon enforce this rule this year.

“The Exchange is determined to enforce its rules and we are giving the stockbroking community two weeks to submit their returns or risk suspension,” Onyema said.

The NSE boss had last week told the House Committee on Capital Market and Institutions that one of the reasons the market collapsed in 2008 was weak enforcement of rules by regulators and past management of the NSE.
According to him, the Exchange had a known practice of not enforcing the rules, in terms of the quality and timeliness of reporting, making it difficult to perform its role as a self regulating organisation (SRO).

He said, “Paper-driven process slowed down the regulatory capacity of the Exchange and contributed to the lax attitude surrounding enforcement. While important information was sometimes released on a selective basis, some listed companies and broker/dealer firms engaged in the act of “cooking their books.”  

He added that inadequate disclosure by listed companies and broker/dealer firms was another key contributor to the crisis.
“Reports to the NSE and the investing public were often inaccurate, late or simply not submitted. This prevented market access to critical information that is required in making informed investment decisions. While some listed companies did not comply with the reporting rules of the Exchange, some broker/dealer firms treaded a fine line between insider trading and their fiduciary responsibility to their clients,” he said.

He noted that in the case of listed companies, the result would have been inflated stock prices, and in the case of broker/dealer firms, misplaced trust that led to improper acts involving investors’ funds (to shore up their own investments) or to meet minimum capitalisation requirements.

Tags: Nigeria, Business, Trading session, NSE, Riot Act to Brokers

Comments: 0


Add your comment

Please leave your comment below. Your name will appear next to your comment. We'll also keep you updated by email whenever someone else comments on this page. Your comment will appear on this page once it has been approved by a moderator.

comments powered by Disqus