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Capital market rule bars stockbrokers from suing NSE

By NKIRUKA NNOROM

The Nigerian Stock Exchange, NSE, has warned that any stockbroker that dares institute court action against it shall be suspended from participating in the stock market pending the determination of such suit.

According to the updated rules and regulations guiding the activities of dealing member firms obtained from the NSE’s website, it also warned dealing members against carrying out business for clients/investors who are in default to another dealing member.

It said, “No dealing member shall institute legal proceedings to enforce a claim against another dealing member or a member arising out of any stockbroking transaction without first exhausting all procedures set out for dispute resolution in accordance with these rules and regulations.

“No dealing member shall institute legal proceedings against the Exchange without first exhausting all procedures set out for dispute resolution in accordance with these rules and regulations.”

It continued, “It is the duty of every dealing member to notify the secretary the name and circumstances of every of such default. The circumstances of each default shall be submitted to the council, which may at its discretion cause the name to be in a list to be kept by the secretary for purpose of circulating the name of defaulters to all dealing members and members of the Exchange. The council may from time to time cause any name to be deleted from the list.”

The NSE also stated that no dealing member is permitted to engage in any business other than securities trading and related businesses.

It noted that the rules were made pursuant to the Memorandum and the Articles of Association of The Nigerian Stock Exchange and are subject to the provisions of the Investments and Securities Act (ISA) of 1999.

It further stated that it is the duty of each dealing member to act as watchdog on other members by reporting breach of any part of the rules in writing to the National Council of The Exchange, or through the Branch Councils to the National Council of The Exchange.

“Any dealing member, being aware of any breach on the part of another dealing member and failing to report the same to council as aforesaid, shall himself/itself be guilty of a breach of these rules and regulations,” it said

Some parts of the rule read: “With respect to activities on the Exchange, no dealing member shall without special consent of the council, and subject to such conditions as the council may impose, enter into partnership or any agency or profit sharing agreement or any association of which the Council may not approve, with any person, firm or limited liability company who or which is not a member of the Exchange.

“Alterations to the particulars of all directorships and shareholdings of dealing members shall be with the prior approval of the Exchange. The secretary shall keep a record of such particulars which shall be available for inspection by dealing members at the registered office of the Exchange.


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