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Is your stock broker still licensed?

By Babajide Komolafe

LAST week Tuesday, the Securities and Exchange Commission (SEC) announced that 437 capital market operators have met its new minimum capital requirement.

The minimum requirement is the amount of money the operators are mandated to have in order to maintain their license to operate either has a stock broker, fund manager, or issuing house.

Unlike the Stock market, Forex trading is Online
Unlike the Stock market, Forex trading is Online

The new the new minimum capital was announced December 2013, with a deadline of December 2014 for operators to comply. But after much pleading, SEC extended the deadline to September 30th, which Wednesday last week.

Immediate implication

The immediate implication of the list published by SEC on Monday is the operators that did not meet the new requirement no longer have government approval or license to operate the business again in the capital market.  If they continue to do so, they are operating illegally.

The reality is that some of these operators will attempt to continue in business, even when they know that, they are doing so illegally.  For this purpose, they would hope that their customers are ignorant of the developments in the capital market, and especially of their new status as illegal operators.

That is why you need to answer the above question. You need to be sure that your stockbroker is among those that met the new minimum requirement for stockbrokers. Otherwise you may be ignorantly dealing with an illegal stockbroker.

It is for this reason that SEC on Thursday advised investors to visit its website to confirm the status of any company they are dealing with in the capital market.  The list is available via www.sec.gov.ng/provisional -list-of-capital-operators.html

If your stockbroker did not meet the new requirement, and as a result  has become an  illegal operator, all you need to do is to transfer your stcokbroking accounts to one of the stockbrokers that met the new requirement.  To this end, SEC also provided a guide on  how you can transfer  your stockbroking account (or shares) from one stockbroker to another one.

The Commission stated, “The following guidelines should be adhered to by investors, target firms and the Central Securities Clearing System (CSCS) where an investor wishes to move his stock account from an under-capitalised Broker/Dealer to a Broker/Dealer or Broker that has complied with the minimum capital requirement (capitalised firm):

Capital requirement

Where the Broker/Dealer has not met the new minimum capital requirement, the investor should approach a capitalised Broker/Dealer or Broker for engagement.

The investor should undergo a Know Your Customer (KYC) process with the new firm

The Broker/Dealer or Broker should open a CSCS account for the investor using the investor’s existing Clearing House Number (CHN) from his former Brokerage Firm;

The Broker/Dealer or Broker should open a CSCS account for the investor using the investor’s existing Clearing House Number (CHN) from his former Brokerage Firm;

The investor should give a mandate to the target firm to transfer his/her account from the under-capitalised firm to the Target firm (capitalised firm);The investor should give a mandate to the target firm to transfer his/her account from the under-capitalised firm to the Target firm (capitalised firm);

The investor should submit evidence of purchase of the shares such as contract notes, receipts of purchase, dividend stubs or confirmation of holdings from the Registrar’s office, signed by the Managing Director of the Registrar firm to the target firm;The investor should submit evidence of purchase of the shares such as contract notes, receipts of purchase, dividend stubs or confirmation of holdings from the Registrar’s office, signed by the Managing Director of the Registrar firm to the target firm;

The Target firm (capitalised firm) should initiate inter-member transfer request;The Target firm (capitalised firm) should initiate inter-member transfer request;

The Managing Director of the Target firm (capitalised firm) shall go to the CSCS to sign off the indemnity form; The CSCS shall process the request and notify the Broker/Dealer or Broker through the CSCS website.

The Managing Director of the Target firm (capitalised firm) shall go to the CSCS to sign off the indemnity form; The CSCS shall process the request and notify the Broker/Dealer or Broker through the CSCS website.


Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.