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140 Capital Market Operators May Lose Licences

No fewer than 140 capital market operators may be delisted by the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) as regulators draw curtain on the recapitalisation.
While intense lobby for a further extension of the recapitalisation deadline continues, sources at SEC and NSE said the capital market regulators would stick to the September 30 deadline.
SEC’s compliance timetable had indicated that a list of the compliant operators would be published on October 2. October 1 is a national holiday in commemoration of Nigeria’s Independence Day.
The sources said nothing has changed in the position of the regulators, noting that SEC, will draw the final mark on compliance by the close of business today.
Under the rules, the NSE is required to replicate any regulatory action by SEC, especially revocation of licence and suspension of any operator.
Preliminary review by SEC indicated that majority of operators have complied with the new minimum capital requirements for their functions. Average compliance level ranged from 70 per cent to 95 per cent across the functions. The final list would be made ready on Friday.
The Nation’s investigation, however, indicated that no fewer than 140 capital market operators might be delisted for failure to meet the new minimum capital requirements. Most of these operators also fall within the inactive operators. A new rule on the revocation of dealing licences and expulsion of inactive stockbroking firms came into effect in June this year empowers the NSE to revoke licences of dormant operators.
A status review by the NSE indicated that some 101 licences might be withdrawn, including some 88 inactive capital market operators.
SEC had in December 2013 announced major increases in minimum capital requirements for capital market functions under a new minimum capital structure that was initially scheduled to take off by January 1, this year. It, however, extended the deadline to September 30.
Minimum capital base for broker and dealer was increased by 329 per cent from the existing N70 million to N300 million. Broker, which currently operates with capital base of N40 million, will now be required to have N200 million, representing an increase of 400 per cent. Minimum capital base for dealer increased by 233 per cent from N30 million to N100 million.
Also, issuing houses, which facilitate new issues in the primary market, will now be required to have minimum capital base of N200 million as against the current capital base of N150 million.
The capital requirement for underwriter also doubled from N100 million to N200 million. Trustees, rating agencies and portfolio and fund managers had their minimum capital base increased by 650 per cent each from N40 million, N20 million and N20 million to N300 million, N150 million and N150 million. A Registrar will now have a minimum capital base of N150 million as against the current requirement of N50 million.
While the minimum capital base for corporate investment adviser remained unchanged at N5 million, individual investment advisers will have to increase their capital base by 300 per cent from N500,000 to N2 million.

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