Lagos-The Association of Stockbroking Houses of Nigeria (ASHON) on Tuesday expressed fears that the persistent downward trend at the nation’s bourse would affect stockbrokers’ recapitalisation plans.
Mr Emeka Madubuike, ASHON President, told the News Agency of Nigeria (NAN) in Lagos that continuous dilution in the value of equities was a big threat to the exercise.[pro_ad_display_adzone id=”10″]
“The major issue we have in this recapitalisation programme is the dilution in value because the market has lost over 33 per cent since October,’’ he said.
Madubuike said that some members who had shored up their capital using equities were in danger of going below the new capital base announced by the Securities and Exchange Commission (SEC) in 2013.
He said that most stockbrokers’ assets were in equities, noting that the lull in the Nigerian Stock Exchange (NSE) would affect their capitalisation exercise.
Madubuike said that “there are people who, as of December, had met the requirement and are in danger of going below the required level due to the slide in the market.
“This is something we need to talk about if the trend continues in the next few weeks, whether to use a prior date as the valuation date,’’ Madubuike said.
He said that the association had drawn the attention of the commission to the development, noting that it would engage SEC if the trend continued.
The ASHON president said that the association’s major objective was to ensure that all members remained in the market, operating at one level or the other.
Madubuike, however, warned that people should not be frustrated out of the market in the name of capitalisation.
He said that the classification of the new capital base for stockbrokers would help the market because people would be accommodated.
Madubuike said that people would make business decisions to determine at what level they wanted to operate, whether as a broker/dealer, broker or dealer or stockbroker.
NAN reports that SEC on Dec. 19, 2013 issued a new capital requirement for capital market operators with Dec. 31, 2014 as deadline but the deadline was extended to Sept. 30, 2015.
A breakdown of the new capital requirements showed that brokers/dealers now required a minimum capital N300 million or an increase of 328.57 per cent, compared with the initial capital of N70 million.
A broker is now required to increase his/her capital base to N200 million from N40 million, while a dealer’s minimum capital now stands at N100 million, as against N30 million, among others. (NAN)