By  PETER EGWUATU

There is the likelihood that between 100 and 150 stock broking firms are likely to meet  the recapitalisation requirement  in the Nigerian capital market, a capital market operator , who preferred to remain anonymous has said.

Vanguard gathered that some of the stock broking firms may not be able to meet the September deadline given by the Securities and Exchange Commission, SEC,  as some of the stock broking firms  have commenced move to reclassify their business.

The SEC had in a circular to all capital market operators titled “New minimum capital requirement: reclassification /reduction of registered functions, mergers and acquisitions” directed all Capital Market Operators proposing reclassification (e.g. Broker/Dealer to Sub-broker) or seeking to reduce their registered functions, in view of the new minimum capital requirement, to notify the Commission not later than July 31, 2015.

This directive also applies to capital market operators opting for mergers, acquisitions or any other form of business combination.

Commenting on the on-going recapitalisation of the capital market operators, Managing Director and Chief Executive Officer, Capital Bancorp Plc , Mr. Aigboje Higo explained  that the recapitalisation of capital market operators is a good thing for the market . In his words “It as a development that would enhance investor value and noted that it would not lead to oligopolistic market. It is likely that between 120 and 150 stock broking firms, out of the over 200 stock broking firms may meet the recapitalisation deadline.”

He explained that Capital Bancorp had met all the requirements for re-capitalisation and minimum operating standard saying recapitalisation programme would promote healthy competition in the capital market.

Commenting on the apathy in the stock market in recent time, he said “Investors who invested wisely would have gained from the market.

In his words “There is empirical evidence that domestic investors who invested wisely and have stayed in the Nigerian stock market post 2009 would have benefitted immensely. So we advise Nigerians to embrace the stock market by investing via professionals that should be able to guide them through.”

It will be recalled that the commission had on December 31, 2013 announced major increases in minimum capital requirements for capital market functions under a new minimum capital structure that was initially scheduled to take off by January 1, this year but which was extended to September 30.

Under the revised minimum capital requirements regime, the minimum capital base for broker and dealer was increased by 329 per cent from the N70million  to N300million , while a broker, who currently operates with capital base of N40million , will now be required to have N200million , representing an increase of 400 per cent.

Also minimum capital base for the dealer increased by 233 per cent from N30million to N100million just as issuing houses, which facilitate new issues in the primary market, will now be required to have minimum capital base of N200 million  as against the current capital base of N150million .

In the same vein capital requirement for underwriter also doubled from N100million to N200million.

The capital requirements set for the various categories of operators had generated serious reactions from the operators as with many claiming it was on the high side. Their argument however was that over-capitalisation could be dangerous for the market as it may lead to a situation where too much funds will be chasing few stocks.