By Rosemary Onuoha

The President Association of Stockbroking Houses of Nigeria has said that The Central Securities Clearing System (CSCS) should stop demanding indemnity notes from shareholders who want to transfer their shares accounts to new stockbroking houses as a result of the closure of their former stockbroking firms by the capital market authorities.

Mr.  Rasheed Yusuf, president Association of Stockbroking Houses of Nigeria (ASHON) who stated this noted that the CSCS should rather be the one indemnifying the shareholders because all information about the account is domiciled with it and not the new house. In recent times the CSCS has asked stockbroking houses that want to take over an account from stockbroking firms that are no longer in operation to indemnify these accounts before the shares can be traded upon.

Speaking to Vanguard, Yusuf who opposed the move noted that the CSCS should be in a better position to give information concerning an account where the stockbroking firms are no longer in operation.

While noting that the standard procedure is that when a stockbroking house is no longer in operation,  the customer should not be made to suffer unnecessarily, as such the account is transferred to another house, which does not mean that the new house should indemnify the account as the new house has no information regarding the account, Yusuf stated.

In his words “What we are saying is that if you are indemnifying somebody, you are saying if something happens, then you should be held responsible. Then if these people are moving from another house to my house, how can I now indemnify them? What am I indemnifying?

Am I indemnifying that ‘yes I know that he is the one that has that account or am I indemnifying that yes he has transferred that account to me?” Yusuf wondered who should be in a position to indemnify an account, saying “Even when you are opening your account through a functioning broker, you will send the document to CSCS.  CSCS has all the documents of every client that opens account because they keep all the documents.

So if anybody is in a position to know, the CSCS should, because they have the specimen signature, they have the documents relating to that client. If that client is now moving to another house, they should be the one to say ‘based on the document that we have, this is not the true owner or this is the true owner of the account.’ So why will they now ask the new house to indemnify the account?”

On the dearth of new issues in the market, Yusuf stated that it is not a good thing if there are no new issues in the market, adding that it is a reflection of the health of the market.  He stated “In the past three years our market has not been as healthy as it should be and therefore not having many new issues coming to the market is a reflection of the change in our market. Efforts should be concentrated on getting our market up and doing because other markets are more active.”