Abuja — The Securities and Exchange Commission (SEC) yesterday disclosed that stock brokers in the Nigerian capital market are indebted to various banks to the tune of about N180bn.

This is in addition to the N296 billion debt portfolio recorded by 157 stock brokerage firms as at June this year. Acting Director General, Securities and Exchange Commission, and Ms Daisy Ekineh stated this at a meeting with members of House of Representatives Committee on Capital Market who visited the Commission as part of the Committee's oversight functions.

Ekineh said the Commission discovered the indebtedness while conducting inspection of 24 stockbrokers and seven fund managers with their trustees and registrars in the wake of the crash of stocks in the capital market and the subsequent liquidity crisis in some commercial banks which were major participants in the capital market.

She however said that despite the challenges in the economy, the capital market has recorded some remarkable appreciation during the year.

"The Nigerian capital market is no doubt, still sluggish as most indicators are relatively weak. Market capitalization at the end of October 2009 stood at N5.14 trillion showing a marginal increase of N0.2 billion or 5.12 per cent over N4.88 trillion recorded at the end of January 2009.

The Commission has intensified it's on and off site inspection of operators. And owing to the observed state of many of them as revealed by their off site inspection, the commission commenced target inspection, with stockbrokers and fund managers as the first group to be inspected," she said.

"So far, 24 stockbrokers and seven fund managers with their trustees and registrars have been inspected. Most of the inspected stockbrokers are still heavily exposed to banks as their total indebtedness was about N180 billion. With the considerable declines in the value of stocks, most of the firms have been unable to repay their loans which they were mostly secured by stocks. As at June 2009, of the 301 stock broking firms, 157 or 52 per cent were indebted to the tune of N296.23 billion while the value of their investment in quoted securities stood at N176.0 billion," Ekineh said. The Commission, according to her, has directed all operators to make full and immediate provisions for their impaired capital latest 15th November 2009. However, Ekineh said, the Commission has instituted an Administrative Proceeding Committee (APC) to give market operators who may have breached provisions of ISA and SEC rules a fair hearing.