With several capital market operators expected to lose their operating licences following the expiration of the deadline set by the Securities and Exchange Commission for the CMOs to meet the new minimum capital base, the procedure for investors to move their stock account from an under-capitalised operator to one that has met the requirement has been unveiled.
The market-wide implementation committee on new minimum capital requirement has advised the investing public to verify the compliance status of their preferred CMO by checking the list on the SEC website.
In a circular posted on the website, the committee highlighted the guidelines to be followed not just by the investors, but the target firms and the Central Securities Clearing System.
The first step, it said, was for the investor to approach a capitalised broker/dealer or broker for engagement.
In doing this, the investor is expected to undergo a Know Your Customer process with the new firm.
The KYC refers to the process of the broker/dealer or broker verifying the identity of the investor in this instance.
After this, the broker/dealer or broker would open a CSCS account for the investor using the investor’s existing clearing house number from his former brokerage firm.
The investor is then expected to give a mandate to the target firm to transfer his/her account from the under-capitalised firm to the target or capitalised firm.
The investor is also expected to submit “evidence of purchase of the shares such as contract notes, receipts of purchase, dividend stubs or confirmation of holdings from the registrar’s office, signed by the managing director of the registrar firm to the target firm”.
After this, the target firm would initiate inter-member transfer request, the committee said, adding that the Managing Director of the target firm would go to the CSCS to sign off the indemnity form.
Finally, the committee added, “The CSCS shall process the request and notify the broker/dealer or broker through the CSCS website.”
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Source : Punch