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The Association of Stockbroking Houses of Nigeria (ASHON) has
appealed to the management of the Nigerian Stock exchange (NSE) over the
suspension of its members.

The Exchange had on Tuesday suspended 60 stockbroking firms
following their refusal to meet the minimum capital base of N70 million
stipulated by the Securities and Exchange Commission (SEC), capital market
regulator.

Ola Yussuff, chairman of ASHON, said the Association is
appealing to the authority of the NSE to give more time to the suspended
stockbroking firms for them to recapitalise.

Mr. Yussuff, who is also the chief executive officer of Trust
Yield Securities Limited, a stockbroking firm that was not affected, said, “In
the interest of the market, we are asking for more time to begin the process.
Even if you ask people to go and recapitalize, they have to look for investors
within the same market. And we all know that investors right now have not
gained full confidence in the market because of past financial crisis. But now
that the market has started showing signs of rebound, let the Exchange give
more time so that investors’ confidence can be fully regained in the market and
affected stockbrokerage firms can also appeal to their investors to invest in
the companies.”

He said the suspended firms are in such situation today because
of the market crisis which started over two year ago and the provisioning which
some of them have been providing for. “So if investors’ monies have not been
lost in those years and we are just few months away from resolving market
crisis through government’s intervention in the banking sector which will also
help the market, why should recapitalisation for brokerages now be the issue?”
Mr. Yussuff said.

He said many brokerage companies have being managing the
situation even before the Asset Management Corporation of Nigeria (AMCON) was
formed and no investors’ funds were lost. “Now that we have an institution like
AMCON that is doing something; though it might not solve all the problems, but
if we all agree that AMCON is going to have positive effect, why don’t we allow
them to finish what they are doing in the next few months?” he added.

Mr. Yussuff said, “We are not saying what the authority is doing
is wrong because no matter the market, no company should operate on a negative
capital; you need to have a remedial plan.

What the association is saying is thank you to the NSE for been
compassionate up to this time, but it should only consider punishing those
affected brokerages when AMCON finish its process and the firms still cannot
survive the positive effect of AMCON.” ‘Highest in the world’ Another
stockbroker whose company was not affected, David Adonri, chief executive
officer of Lambert Trust and Securities Company Limited, said with the minimum
capital base of N70 million required by SEC, Nigerian stockbrokerages would
probably be the highest in the world.

Mr. Adonri said, “In India, the fourth largest economy, the
maximum capital for stockbroking firm is equivalent to N2 million. Some other
stock Exchanges even require less than that from stockbrokerages. So the
initial N20 million require in Nigeria is even over capitalisation.” He said
stockbrokers are still trying to make the Exchange understand that
stockbrokerages don’t even need such capitalisation to operate.

Meanwhile, Wole Tokede, spokesperson for the NSE, said though
the Exchange share the pains of the affected members, “as regulator we still
have to do our job by protecting investors’ interest.” Mr. Tokede said, “It is
painful.

It is not a situation to celebrate because it will affect
trading performance.

But the main thing is that investors’ interest should be
protected.” he said that although there is no specific deadline yet given for
the stockbroking firms to meet the capitalisation requirement, but there may be
one very soon.

He said, “Once the affected firms meet the capitalisation
requirement, we clear them immediately. I can confirm that the three companies
that met the requirement yesterday (Tuesday) were cleared today (Wednesday).”
For clients of the affected companies that may not meet the capitalisation
requirement, he said, “It is not a big deal. Clients can always change
brokerage houses.”

He however said investors should not panic because the NSE only
suspended the companies and has not revoked their licenses.