12 stockbroking businesses have been placed on the blacklist by the Nigerian Exchange Limited (NGX) due to their violation of shareholders’ fund requirements.
In addition to First Stockbrokers Limited, GMT Securities Limited, Standard Alliance Capital & Asset Management Limited, Enterprise Stockbrokers Limited, Adamawa Securities Limited, Gombe Securities Limited, CEB Securities Limited, and Horizon Stockbrokers Limited, these companies also provide stock brokerage services.
Stockbroking Firms
According to the NGX, as of June 19, 2023, these companies’ shareholders’ funds are insufficient. Trading has been put on hold for the companies until they comply. These companies are subject to disciplinary action, and some are seeking to raise new money and resume active market operations.
The minimum capital requirement for each blacklisted company is N200 million, with dealer licenses costing N100 million and broker-dealer licenses costing N300 million.
- Nigerian Exchange blacklists 12 stockbroking businesses for violating shareholders’ fund requirements.
- Blacklisted companies require N200 million in capital, dealer, and broker licenses.
- Highcap Securities CEO David Adonri emphasizes capital’s importance but lacks investor protection.
Firms with smaller capital bases might not have the financial clout to transact in significant numbers, and if this insufficient capital spreads widely, stock market activity would decline and investor confidence would erode.
Trading firms with insufficient capital may need to be stopped from trading or suspended by regulators, or they may need to change their status to that of a broker or sub-broker to have the necessary capital.
According to David Adonri, Vice Executive Chairman of HIGHCAP Securities Limited, while sufficient capital is necessary for the stockbroking industry, it has little bearing on investor protection and investment security.
The safety of assets can be better addressed by other risk mitigants in the capital market, such as investors’ protection funds and Fidelity Guarantee Insurance.
