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SEC approves minimum capital for market operators

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Pursuant to Section 313(6) of the Investments and Securities Act (ISA) 2007, the board of the Securities and Exchange Commission (SEC) has approved the new minimum capital requirements for all categories of Capital Market Operators.

Following the amendments, the capital requirement for Broker/Dealer has been increased from N70 million to N300million. For broker only, the capital requirement has been increased from N40 million to N200 million; while for dealer, it has been increased from N30 million to N100 million.

Barely three weeks ago, at the third Capital Market retreat, Arunma Oteh, director-general, Securities and Exchange Commission said a world class capital market boasts of strong institutions, adding that “this is why since 2010 we have prioritised efforts to strengthen the SEC, being the apex regulator of the market and all market operators.”

The minimum capital requirement for Issuing House has also been increased from N150 million to N200 million; while that of Underwriter has been increased from N100 million to N200 million.

This development comes barely one year after stock brokers faulted moves  aimed at encouraging a one-size-fits all approach to minimum capital requirement for dealing member firms at the Nigerian Stock Exchange (NSE).

They had suggested that the stock broking firms’ minimum capital should be determined by the level of business they want to do.

For a Registrar in the Nigerian capital market, the minimum capital requirement is now N150 million, from N50 million; while for those in Trustees business, the capital requirement has been raised to N300million, from N40 million.

Furthermore, the minimum capital requirement for Rating Agency has been increased from N20 million to N150 million; while the capital requirement for Corporate Investment Adviser remains at N5 million.

From an initial capital requirement of N500,000 every Individual Investment Adviser is expected to have  at least N2million as capital; while Fund/Portfolio Manager’s minimum capital requirement has be raised from N20 million to N150 million.

Analysts foresee the new capital requirements heralding an era of mergers and acquisitions (M&A) among existing firms to produce stronger institutions.

By: Iheanyi Nwachukwu

6 Responses to SEC approves minimum capital for market operators

  1. No room for small players in the Nigerian capital market.

    emmanuel ewumi
    December 19, 2013 at 5:24 am
    Reply

  2. This will surely reduce the number of players in the market. With effect from when?

    Akinnola Richard
    December 19, 2013 at 8:28 am
    Reply

  3. Mergers and acquisitions are on the card as capitalism takes its rightful place in the Nigerian capital market. Now that the stakes are so high, adequate measures should be entrenched to eliminate corporate failures of these large organisations.

    The Corporate Prof.
    December 19, 2013 at 11:23 am
    Reply

  4. Hope there is enough time for operators to meet these requirements

    seyi solomon
    December 19, 2013 at 11:52 am
    Reply

  5. this is a step in the right direction, but when it is expected to take effect

    ogbonna lois onyedikachi
    December 19, 2013 at 1:02 pm
    Reply

  6. This action by SEC will reduce sharp & fraudulent practices being perpetrated against retail investors。It is welcome。

    Ogunlade, Isaac Ayodejì
    December 19, 2013 at 1:28 pm
    Reply

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