The Nigerian Stock Exchange (NSE) is currently a haven for about 50 inactive stockbroking firms, most of which have not recorded any form of trading activity for three or more months, BusinessDay can disclose.
Month-on-month (mom), market watchers have witnessed stock trading activities (volume and value of deals) at the Nigerian bourse tilting towards control by a few stockbroking firms.
At the Exchange, there are about 220 active dealing member firms; 20 inactive dealing member firms deregistered by the Securities and Exchange Commission (SEC); and 18 inactivated dealing member firms.
In the five trading months to May 2015, stockbrokers’ performance report shows only ten firms accounted for 51.12 percent or 45.610billion units of traded stocks. In terms of total value of deals in the five-month period, only ten stockbroking firms accounted for 66.92 percent or N606.808billion worth of equity deals.
The directory of dealing members at the Nigerian Stock Exchange shows the 50 inactive stockbroking firms which include: Aims Asset Management Limited, Allbond Investment Limited, Arian Capital Management Limited, Bauchi Investment Corporation Securities Limited, Bytofel Trust & Securities Limited, Cadington Securities Limited, CEB Securities Limited, Consolidated Investments Limited, Dakal Services Limited, Davandy Finance Limited, and Decanon Investment Limited.
Our investigation also revealed other inactive dealing member firms like: Emi Capital Resources Limited, Empire Securities Limited, Falcon Securities Limited, First Alstate Securities Limited, First Equity Securities Limited, Fittco Securities Limited, ITIS Securities Limited, Kakawa Asset Management Limited, LB Securities Limited, Lion Stockbrokers Limited, MACT Securities Limited, Maninvest Securities Limited, Maven Asset Management Limited, Metropolitan Trust Nigeria Limited, Midpoint Capital Limited, ML Securities Limited, Monument Securities & Finance Limited, Northbridge Invest & Stockbrokers Limited, and Omas Investment & Trust Company Limited.
According to the Nigerian Stock Exchange, other inactive dealing member firms are: Options Securities Limited, Peninsula Asset Management & Investment Company Limited, Platinum Capital Limited, PML Securities Company Limited, Professional Stockbrokers Limited, Profund Securities Limited, Prudential Securities Limited, Regency Finance Company Limited, Securities Solutions Limited, Securities Trading & Investment Company Limited, Shalom Investment & Securities Limited, Supra Commercial Trust Company Limited, Surport Services Limited, Vision Trust & Investment Limited, Waila Securities and Funds Limited, Wema Asset Management Limited, Wizetrade Capital & Assets Management Limited, WT Securities Limited, and Zuma Securities Limited.
The Securities and Exchange Commission (SEC) in December 2013 approved the new minimum capital requirements for Capital Market Operators (CMOs) aimed at improving operators baseline infrastructure, market access and service delivery.
The deadline for compliance by existing CMOs is September 30, 2015 while compliance was stated as a prerequisite for the registration of new CMOs.
Considering this development, some of the inactive dealing member firms may be on their exit route from the stock market.
For instance, the SEC insists that the assets mix ratio for core operators in the market shall be minimum of 60 percent liquid assets, while for non-core operators its shall be a minimum of 30 percent liquid assets.
“The assets mix ratio shall be with reference to the minimum capital base as prescribed by the Commission.
The liquid assets are cash, bank deposits, treasury bills, collective investment schemes, bonds, quoted securities and unquoted securities actively traded in an OTC market (NASD &FMDQ)”, according to the SEC.