BY NKIRUKA NNOROM

A senior stockbroker in the Nigerian Stock Exchange, NSE, Mr. David Adonri, has faulted the House of Representatives over its recommendation that the minimum capital requirement for stockbroking firm be increase to N500 million.

Speaking on the backdrop of the recent decision by the joint House of Assembly to withhold the Securities and Exchange Commission’s budget for 2013, Adonri said that the action has shown that almost everything about report submitted by the Senate Committee on Capital market lacked depth and at best impulsive.

His words: “I think the report the Legislature sent to the Executive for implementation also gives some course for concern because other than requesting for the sack of the Director General of the Securities and Exchange Commission, SEC, they also requested that the minimum capital requirement of the stockbroking firms be increased to N500 million.

File Photo: Cross section of House of Representatives members at the National Assembly in Abuja Photo : Gbemiga Olamikan

“So, it beats ones imagination that they could come up with such recommendation; what informed that recommendation that the capital base should now be increased to such level.”

He explained that at the moment, stockbrokers in the Nigerian capital markey have about the highest capital base among other emerging markets, including some developed market.

The minimum capital base requirement for brokerage firm in Bombay Stock Exchange (India), according to him, was an equivalent of N2 million to N5 million, while that of the United States of America was maximum of N37 million.

“So, one therefore may tend to think that the work that committee did was not far reaching. It was not guided by well researched information. So, they were acting on impulse, and it is not unlikely that this action (unapproval of SEC’s budget) that the National Assembly is taking is also impulsive,” he affirmed.

Vanguard recalls that following the probe into the near collapse of the capital market conducted about eight months ago, the House Committee had come up with some recommendations, among which was the need for the stockbroking firms to up their capital base to N500 million from the initial N70 million.