Business CIS, ASHON faults SEC's New Minimum Capital Structure

Mr. Ariyo Olushekun, President of The Chartered Institute of Stockbrokers (CIS) and Mr. Emeka Madubuike, President of the Association of Stockbroking Houses of Nigeria (ASHON) at a press conference have jointly faulted the new capital requirement for operators released by the Securities and Exchange Commission (SEC).

Olushekun said : “the new structure is faulty with apparent deficiencies as regards to investor protection and risk management”.

According to him, SEC has failed as a regulator in the new capital requirement for operators by not considering investors’ protection, confidence and risk management.

He assured operators that the issue would be discussed with the commission and resolved amicably and urged SEC not just join the bandwagon of current financial industry increase of share capital, but to emphasise market development and investor confidence.

Mr Emeka Madubuike, President of ASHON, said that the operators were not against any recapitalisation programme, but that the exercise should be done in a right way.

Madubuike said that certain things needed to be addressed in the market before the recapitalisation exercise.

He said that the capital market community had earlier written the commission seeking for a meeting to address the grey areas in portfolio investment.

SEC had on Dec. 19, issued new minimum capital requirements for capital market operators with December 31, 2014 as deadline for operators to recapitalise.

A breakdown of the new capital requirement showed that broker/dealer now requires a minimum capital of N300 million, a 328.57 per cent increase over current minimum capital of N70 million.

Broker is now required to increase its capital to N200 million from N40 million, while a dealer’s minimum capital now stands at N100 million from N30 million.

Issuing house is now to have capital requirement of N200 million from N150 million, while underwriters are now expected to have N200 million as working capital from N100 million.

A registrar is to have minimum capital of N150 million from N50 million.

Trustees capital requirement is to rise to N300 million from N40 million, while rating agency from N20 million to N150 million.

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