DG, NSE, Arunma Oteh
The Securities and Exchange Commission (SEC) is planning to introduce independent directors to the boards of stockbroking firms as part of efforts to strengthen corporate governance among broking firms and restore investor confidence in the market.
Currently, listed companies are required to have independent directors on their board, who are expected to ensure they operate with high standard of corporate governance.
Market sources told THISDAY last week that the apex regulator of the stock market is contemplating the introduction of independent directors on the board of stockbroking firms.
“SEC is planning to introduce independent directors on our board that will report directly to commission,” the source, who is a senior broker said.
Although he did not give details, the source said the independent director would have an additional check on activities of stockbroking firms in order to ensure that good corporate governance practices are adopted by market operators.
According to him, already regulators have made it compulsory for firms to have compliance officers, who report directly to the commission.
He said that a firm that did not have a compliance officer was sanctioned.
“Every three months, SEC goes to every stockbroking firm and asks for this compliance officer. Anyone that does not have compliance officer is sanctioned. The compliance officer is held responsible if anything goes wrong as a result of the firm failing to comply with market rules. All these things are being to make sure that operators stick to the rule of the game,” the broker said.
Apart from the new move to have independent directors, the Nigerian Stock Exchange (NSE), through the new management has strengthened the enforcement of market rules among others so as to restore investor confidence.
For instance, in 2011 the NSE enforced the minimum capital requirement for broker-dealers and in accordance with its zero tolerance policy, the exchange reconstituted its in-house investigation panel.
Also, to encourage the highest level of compliance, the exchange introduced penalties for seven violations previously lacking penalties in the exchange's rules.
The Chief Executive Officer of the NSE, Mr. Oscar Onyema, said last week that the implementation of exchange’s zero tolerance policy for violation of its rules and regulations, would further be strengthened the Investors Protection Fund(IPF), which got a board of trustees (BOT) penultimate week.
“We are quite thrilled about inauguration of the BoT of the IPF as investor protection is one of the five pillars upon which our transformation agenda is built. We are pleased that investors will have this source of relief in applicable circumstances,” Onyema said.