The meeting of the Securities and Exchange Commission with capital market operators on the new capital requirement has ended in a deadlock.
The News Agency of Nigeria reports that the meeting ended in a deadlock because SEC refused to accommodate some suggestions of the operators on the new minimum capital requirements.
Emeka Madubuike, the President of the Association of Stockbroking Houses of Nigeria, confirmed the development to the NAN in Lagos.
Madubuike said that the meeting with the SEC executive management did not yield any result as both parties failed to reach a compromise.
He said that the stockbrokers would seek audience with the commission’s board to discuss their reservations on the new capital requirement issued by SEC.
“We want to follow due process in the interest of the market and we are going to discuss with SEC’s board,” Madubuike said.
He said that the stockbrokers decided to follow due process in order not to overheat the system and the market.
NAN reports that SEC had on December 19 issued new capital requirement for capital market operators with December 31, 2014 as deadline for operators to recapitalise.
A breakdown of the new capital requirement obtained by NAN showed that a broker/dealer now requires a minimum capital of N300 million or an increase of 328.57 per cent compared with the initial capital of N70 million.
Brokers are now required to increase their operating capital to N200 million from N40 million, while a dealer’s minimum capital now stands at N100 million against N30 million.
Issuing house operational capital requirement also rose to N200 million from N150 million, while underwriters are now expected to have N200 million as working capital from N100 million.
Under the new capital requirements framework, a registrar’s operational capital has been reviewed up to N150 million from N50 million.
Trustees capital requirement also rose to N300 million from N40 million, while that of rating agency has appreciated from N20 million to N150 million.
NAN also reports that the Chartered Institute of Brokers and ASHON had faulted the new capital requirement released by the commission.
Ariyo Olushekun, CIS President, said at a joint press conference organised by CIS and ASHON recently that market operators had identified some deficiencies in the new capital structure.
Olushekun stated: “The new structure is faulty with apparent deficiencies as regards to investor protection and risk management.”
He said that the commission failed to consider investor protection and confidence as well as risk management in the new capital requirement regime.
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