384 Market Operators Meet SEC’s Capital Requirement | Independent Newspapers Limited
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384 Market Operators Meet SEC’s Capital Requirement

Posted: Sep 30, 2015 at 12:40 am   /   by   /   comments (0)

By Bamidele Ogunwusi


Barely 24 hours to the expiration of today’s deadline given for market operators to meet the new minimum capital requirement, the Securities and Exchange Commission (SEC), on Tuesday, published on its website a list of 384 companies that have so far complied.

The final list of capital market operators (CMOs) that met the deadline, representing 85.52 per cent of 449 registered capital market operators, the commission said, was published after the necessary capital verification was conducted.

Also uploaded to the website was the list of 36 operators processing reclassification and reduction of function as well as a list of 12 operators currently undergoing a merger process.

The board of the SEC had on December 18, 2013, announced new minimum capital requirements for all categories of market operators in pursuant to Section 313(6) of the Investments and Securities Act (ISA) 2007.

The apex regulator of the Nigerian capital market increased minimum capital base for broker/dealer by 329 per cent from the existing N70 million to N300 million. A broking firm which operated with capital base of N40 million, now has N200 million, representing an increase of 400 per cent.

While the minimum capital for dealer was raised by 233 per cent from N30 to N100 million, that of issuing houses (facilitators of new issues in the primary market) was increased to N200 million from N150 million.

The capital requirement for a company to underwrite issues was also raised from N100 to N200 million, just as share registration companies now have to raise their capital base from N50 to N150 million.

The minimum capital for corporate investment advisers was however retained at N5 million, unlike individual investment advisers who would only operate with a 300 per cent hike in capital base from N500,000 to N2 million.

To facilitate the smooth implementation of the new minimum capital requirements for operators, the CMC set up a market-wide “Implementation Committee on New Minimum Capital Requirement for CMOs,” comprising the SEC, Nigerian Stock Exchange (NSE), Central Securities Clearing System (CSCS), Association of Stockbroking Houses of Nigeria (ASHON) and all other capital market trade groups.

Notable on the list of CMOs were 2AS AMAO CONSULT, Access Bank, FMDQ OTC Dealer, ACL Capital Partners Limited, Adonai Stockbrokers Limited, Aegis Financial Services Limited, Afribank Securities Limited, Africa Prudential Registrars Plc, African Alliance Stockbrokers Limited, Afrinvest Securities Limited and Afrinvest West Africa Limited.

As at close of business last week, about 50 capital market operators were still processing their reclassification and reduction of function; while 12 of them were processing mergers and acquisitions.

Judging by the capital base of operators licensed for broker/dealer functions, analysts say the market now has a new set of financial-power operators capable of competing favourably in terms of deals making and infrastructure in a market that is already tilted towards oligopoly, where a few operators account for over 60 per cent of volume of deals. 

Victor Ogiemwonyi, Chief Executive Officer, Partnership Investment Company Plc, had noted ahead of the SEC’s official release of the final list that “it is only a flourishing capital market industry that can support the economy.

“The market’s new imperatives will work for everyone. Investors will find a more confident environment, operators will hopefully stabilise and find more business to do and compete in a healthier economic environment and the regulator will focus on fewer operators, and hopefully will have more time to work on enhancing and enabling Market Operators to flourish,” said Ogiemwonyi, who is also president of the Association of Issuing Houses of Nigeria (AIHN).