SEC’s New Capital Requirement Divides Operators, Investors

The new capital requirement released by the Securities and Exchange Commission (SEC) for capital market operators has continued to generate mixed feelings within the sector.

The new capital as released by SEC with deadline pegged at December 31, 2014, expectes market operators to recapitalise.

According to SEC, broker/dealer now requires a minimum capital of N300 million or an increase of 328.57 per cent compared to the initial capital of N70 million.

By this new capitalisation strategy, a broker now requires to increase its capital to N200 million from N40 million as dealer’s minimum capital stands at N100 million as against N30 million.

In the same vein, issuing house operational capital increased to N200 million from N150 million as underwriter now operates with N200 million as a working capital as  compared to N100 million.

In their reaction, Association of Stock broking Houses of Nigeria (ASHON) said that the increase is a rude shock that would cause a setback to the gains recorded in the sector so far.

ASHON reiterated that the new requirement if implemented by SEC would distort the overall policy geared towards earning confidence of both the operators and investors.

The association’s president, Mr. Emeka Maduike said the market was still undergoing demutualisation programme and should be allowed to run its course, adding that the timing of the capitalisation was not appropriate.

An investor, in Port Harcourt Ejike Chikwere  said that the recapitalisation was a welcomed development that would encourage broking firms’ merger and prevent loss of investments.

Chikwere noted that it would be like what happened in the banking sector, adding the need for market operators to accept what he called an innovative idea from SEC”.

He noted that it is always difficult to pursue and achieve a change in any aspect of operation, saying that with time, it will work out well.

Another investor, Mr. Lucky Thompson said that the notion is good but the timing is worrisome, adding that there is also the problem of jumping into action without due deliberation or notification to the stakeholders in the market sector.