More stockbroking firms stand the chance of losing businesses as the Nigerian Stock Exchange (NSE) prepares to enforce its rule concerning compliance officers who are required to ensure full compliance with all NSE requirements.
Over 45 stockbroking firms are currently locked out of trading activities due to their inability to comply with the N70 million required capitalisation. While the broking firms are counting their losses, THISDAY checks revealed that more firms may lose business as from April 1, 2011 as NSE will enforce Article 15(c) of its Rules and Regulations which required alls firms to have compliance officers.
It was gathered that all stockbroking firms are supposed to have compliance officers, who could be lawyers, accountant, stockbrokers.
Such officers are expected to be cleared by the Securities and Exchange Commission (SEC) before their names are submitted to the NSE. But many of the stockbroking firms do not have compliance officers.
However, the NSE has directed all stockbroking firms that as from April 1, 2011, all correspondence must be signed by the Chief Compliance Officer and/or the Managing Director/Chief Executive Officer of the firms.
THISDAY checks revealed that already, a circular with reference RRM/CIR/08/02/11 has been sent to all the dealing members last week in this regard.
According to the circular, obtained by THISDAY, the directive is "in line with Article 15(c) of Rules and Regulations Governing Dealing Members (Rules), which requires Compliance officers to advise the members firm and its employees on the application of the Rules."
"Consequently, all Dealing Members must forward to the Exchange the names, Curriculum Vitae and signature specimen of their Chief Compliance Officers who are duly registered by the SEC," the NSE declared.
Article 15(c) of the NSE rules states that Dealing Member firm shall at all times have one or more Compliance officers who shall be identified to The Exchange and competent to advise the member firm and its employees on the application of these Rules, and shall report to the Exchange any legal violation within 24 hours of their knowledge of such violation and propose the appropriate remedy thereto.
The Compliance officers shall also be responsible for ensuring that money laundering training programmes are administered on persons qualified to conduct business on the behalf of the firm.
It was gathered that the enforcement of the rule would affect many of the brokering firms because they have not been complying over the years. An operator said that the enforcement of the rule will be healthy for the market, explaining that it will lead to better structure that is lacking among operators.