285 operators meet new capital requirement ahead of tomorrow’s deadline

No fewer than 285 capital market operators (CMOs) have so far complied with the new minimum capital market requirement ahead of tomorrow’s deadline set by the Securities and Exchange Commission (SEC), BusinessDay checks show.

While most operators have already recapitalised, others were said to be in the process of injecting additional capital, seeking reduction or reclassification of functions, as well as undergoing mergers and acquisitions (M&As).

As at close of business last week, about 50 capital market operators were still processing their reclassification and reduction of function; while 12 of them were processing mergers and acquisitions.

SEC said the final list of CMOs which meet today’s (September 30, 2015) deadline would be uploaded to the Commission’s website “after proper capital verification has been conducted”, adding that any CMO that fails to comply with today’s deadline will cease to operate in the Nigerian capital market.

For operators with broker/dealer function, analysts said the market now produces a new set of financial-power operators capable of competing favourably in terms of deals making and infrastructure in a market that is already tilted towards oligopoly where a few operators account for over 60 percent of volume of deals.   

Victor Ogiemwonyi, Chief Executive Officer, Partnership Investment Company Plc told BusinessDay, ahead of SEC official release of final list today that, “it is only a flourishing capital market industry that can support the economy.

“The market’s new imperatives will work for everyone. Investors will find a more confident environment, operators will hopefully stabilise and find more business to do and compete in a healthier economic environment and the regulator will focus on fewer operators, and hopefully will have more time to work on enhancing and enabling Market Operators to flourish,” said Ogiemwonyi, who is also the president, Association of Issuing Houses of Nigeria (AIHN).

To facilitate the smooth implementation of the new minimum capital requirements for Capital Market Operators, the Capital Market Committee (CMC) set up a market-wide “Implementation Committee on New Minimum Capital Requirement for CMOs” comprising the Securities and Exchange Commission (SEC), the Nigerian Stock Exchange (NSE), the Central Securities Clearing System (CSCS), the Association of Stockbroking Houses of Nigeria (ASHON) and all other capital market trade groups.

The apex regulator of the Nigerian capital market increased minimum capital base for broker/dealer by 329 percent from the existing N70 million to N300 million. A broking firm which operated with capital base of N40 million, now has N200 million, representing an increase of 400 percent.

Minimum capital base for dealer was increased by 233 percent from N30 million to N100 million. Also, issuing houses, which facilitate new issues in the primary market, now have minimum capital base of N200 million, as against the previous capital base of N150 million. The capital requirement for underwriter also doubled from N100 million to N200 million.

A  registrar now has capital base of N150 million, as against previous requirement of N50 million. While the minimum capital base for corporate investment adviser remained unchanged at N5 million, individual investment advisers now operate with increased capital base of 300 percent, from N500,000 to N2 million.

Iheanyi Nwachukwu