The Securities and Exchange Commission, in a circular on Monday, has directed all capital market operators opting for mergers, acquisitions or any other form of business combination, in view of the new minimum capital requirement, to send their notifications to the commission on or before July 31.
The circular said the directive was also applicable to capital market operators seeking to downsize from stockbroker to sub-broker, broker-dealer to either broker or dealer, and from multiple functions to a single function, among others.
Under the reform agenda initiated by the immediate past director general of the commission, Arunma Oteh, fresh capital base for various functions was prescribed by SEC. Also, the minimum operating standard requirements prescribed by the Nigerian Stock Exchange for all capital market operators was expected to take effect from January 1.
SEC in December 2013 announced major increases in new minimum capital requirements for all capital market operators under a new minimum capital structure that was initially scheduled for effective take-off on January 1.
The deadline was, however, extended to September 30.
Under the new capital requirements, minimum capital base for broker-dealer was raised by 329 per cent, from the existing N70million to N300million, while, brokers were required to have N200million capital base, from N40million (about 400 per cent increase), and dealers’ minimum capital base by 233 per cent, from N30million to N100million.
Similarly, issuing houses, which facilitate new issues in the primary market, were required to have minimum capital base of N200 million, as against N150 million previously, while capital requirement for underwriters also was doubled from N100million to N200million.
Also, trustees, ratings agencies and portfolio and fund managers had their minimum capital base raised by 650 per cent each, from N40million, N20 million and N20 million to N300 million, N150 million and N150 million respectively, while a Registrar would now be required to have a minimum capital base of N150 million, from N50 million.
The capital base for corporate investment adviser was left unchanged at N5million, with individual investment advisers having their capital base jacked up by 300 per cent, from N.5 million to N2 million.
Although the NSE had given December 31, 2015 deadline for the reclassification exercise to be completed for stockbroking firms based on their operating capacities, the new MOS standards were for broker-dealers, brokers and dealers.
The standards addressed issues of manpower and equipment; organizational structure and governance; effective processes; global competitiveness; and technology.
Latest by March 31, 2015, each dealing member of the NSE is required to submit a final MOS compliance level report in the prescribed templates previously provided, failure of which dealing members risk immediate suspension from trading till further notice.
Starting from April 2015, till the fourth quarter of 2015, the exchange said it would conduct thematic reviews and examinations to evaluate each dealing member’s level of compliance with the MOS.
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