NSE DG, Oscar Onyema
By Malachy Agbo
The Association of Stock Broking Houses of Nigeria (ASHON) has kicked against the Nigerian Stock Exchange's proposed guidelines for the admission of new stock broking firms into the capital market, THISDAY can reveal.
Rising from a five hour meeting held last week, ASHON resolved to advise the exchange not to continue with its proposed guidelines for the admission of new dealing members, adding that there are other pressing needs the exchange should focus its attention to which it hoped will restore investors' confidence in the market.
At the end of the deliberations, they set up a committee to harmonise their position which will be forwarded to the exchange soon.
According to a reliable stock broker, who was privy to the deliberations, it was unanimously agreed that they will advise the NSE not to admit more new members.
“We agreed that based on an earlier promise by the exchange not to accept new members in the near future, we are standing on that position and we made it clear that managing the already licensed dealers is an issue; yet, they want to register new ones,” he said.
The association also agreed that the exchange should cancel all licences issued to brokers that have never been used. The measure will affect those they termed as inactive, because they have not traded in the last five years. They will also advise that the NSE focuses more on the planned demutalisation of the NSE, which several modern markets around the world have adopted.
“We agreed that exchange should also introduce measures that will attract retail investors back to the market and restore confidence which is obviously missing in the market today. This is a priority,” the stock broker said.
The NSE recently introduced new guidelines that propose a total of N17.9 million as fees for obtaining a new dealing membership licence and operating as a stock broking firm in the nation's capital market.
The fee is however exclusive of the N70 million minimum capital requirement stipulated by the Securities and Exchange Commission (SEC) for dealing houses.
A further breakdown of the proposal indicates that any company wishing to be registered as a dealing member would have to pay N15 million as the dealing membership licence fee; N1 million contribution to the Investment Protection Fund; N780,000 for the Automated Trading System (ATS) engine; N995,000 for the ATS upgrade; N100,000 for the Trade Guaranty Fund; and N25,000 to the Central Securities Clearing System as eligibility fee.
The NSE further released the management structures that new firms must put in place. It includes the appointment of a chief financial officer, chief compliance officer and business relationship offer, who must all possess the specified qualifications, among other requirements.