NSE steps up regulation of online trading

….Stock market gains N32bn as sell pressure reduces

The Nigerian Stock Exchange (NSE) in its ef- fort to effectively monitor and regulate the online trading process which was revolutionised with the launch of X-Gen trading engine in the third-quarter (Q3) of 2013 has finally come up with guidelines for dealing member firms to adhere to.

Meanwhile the Ni- gerian Stock Exchange All Share Index (ASI) in- creased by 0.28% after yes terday trading on the local bourse , which pushed the Year-to-Date (Ytd) return high at -3.18%.

The All Share Index closed at 33,556.35 points against the preceding close of 33,462.34 points while market capitalisation gained N32billion to close at N11.454 trillion against preceding day close of N11.422 trillion.

The volume of stocks traded yesterday de- creased by 73.92% from 590.79million to 154.08million, while the total value of stock traded decreased by 1.98% from N4.12billion to N4.04billion in 3,515 deals.

NSE in the seven point guideline for online trad- ing as stated in the circu- lar dated June 1, 2015 not- ed that “Dealing Members that intend to set up online trading portals shall im- plement and set up XNet connectivity and an Or- der Management System (OMS) that is certified by The Exchange.”

The NSE also said no Dealing Member shall operate an online trading portal without subjecting the online portal to regular penetration tests, “which shall be no less than twice a year with a reputable firm and shall submit to The Exchange the certified Penetration Testing Re- ports from a credible Information Security company that the online portal plat- form is secured for usage. The Exchange will carry out routine spot checks to validate the Penetration Testing Reports on an an- nual basis and that any identified issues are recti- fied on a prompt basis.”

According to the NSE, “All trading activities on the portal must be duly monitored and supervised by an Authorized Clerk employed by the Dealing Member.

Any trading er- rors or anomalies shall be duly and promptly report- ed to the Exchange in line with the Exchange’s Error Trade rules.”

Any Dealing Member that intends to operate an online trading portal shall carry out a comprehen- sive “Know Your Client” requirement on all clients registered through the online trading portal be- fore an online trading account is activated, or any transaction is carried out by investors on the portal, and keep the records in that regard for a minimum period of 6 (six) years, or as may be amended from time to time.

Disclose on its trading portal and account open- ing forms the risks associ- ated with using the portal and shall comply with all The Exchange’s Rules and Regulations includ- ing those on communica- tions, advertisement and publication.

In addition to the afore- mentioned guidelines, ap- plications used by clients to access the OMS system shall be protected with strong passwords, strong authentication in line with industry standards, op- timised for performance and regular security test- ing.

“Any other rules that may apply from time to time”, the NSE added.

IHEANYI NWACHUKW