Stockbrokers in the country have begun steps to get another extension of the deadline for firms to increase their capital bases as required by the Securities and Exchange Commission (SEC).
The commission had earlier succumbed to pressure from market operators and shifted the deadline to Sept. 30 from Dec. 31, 2014.
Investigations by The Tide showed that brokers under the aegis of Stockbroking Houses of Nigeria (ASHON) are currently discussing with the commission for further extension.
The President of ASHON, Mr Emeka Madubuike, who confirmed the development to reporters in in Lagos, said that the implementation of the policy should be extended to 2016.
Madubuike said that the brokers had commenced discussions with SEC for a review of the Sept. 30 date because of developments in the market and the economy.
“The commission needs to review the deadline, essentially because the reason for the first extension has not changed,” he said.
According to Madubuike, the current situation is worse, in terms of the economy.
He said that stockbrokers’ assets in equities were depreciating regularly because of recent falls in the market.
“We are not against the policy; we are just looking at the timing and if it will succeed, there should be a second look as far as timing is concerned,” he said.
Madubuike said that the association’s major concern was to ensure that “whatever policy is implemented will benefit the market and the economy.”
He said that uncertainties in the economy had made it imperative for the commission to suspend the implementation of the policy.
According to him, a lot of factors in the market and economy are beyond the control of market operators.
He said that the capital market contributed immensely to the capitalisation of banks and insurance companies which used the market to increase their capital bases.
“Capitalisation has happened in other sectors and they used the market to shore up their capital but stockbrokers are handicapped,” Madubuike said.
It would be recalled recalls that SEC on Dec. 29, 2014 extended the deadline.
Under SEC’s recapitalisation policy, broker/dealer operational fund was increased by 329 per cent to N300 million from the N70 million.
A broker, who currently operates on a capital base of N40 million, will now be required to have N200 million, representing an increase of 400 per cent.
Also, the minimum capital base for dealers increased by 233 per cent from N30 million to N100 million.
Similarly, issuing houses, which facilitate new issues in the primary market, will now be required to have minimum capital bases of N200 million instead of N150 million.
Also, dealing members of the exchange are contending with minimum operating standards recently introduced for all the three classes of dealing members, including broker dealers, brokers and dealers.
The new standards address the five broad areas of manpower and equipment, organisational structure and governance; effective processes; global competitiveness and technology.