CMC inaugurates committee on minimum capital requirement

The Capital Market Committee has set up a market-wide implementation committee on the new minimum capital requirement for capital market operators, the Securities and Exchange Commission said.

According to the commission, the committee is meant to facilitate the smooth implementation of the new minimum capital requirement for CMOs.

The committee comprised the Securities and Exchange Commission, Nigerian Stock Exchange, Central Securities Clearing System, the Association of Stockbroking Houses of Nigeria and all other capital market trade groups, a statement by SEC on Wednesday said.

The committee advised the investing public and public companies to verify the compliance status of their preferred CMOs by checking the list posted on the SEC’s website.

It explained that the list might change because some CMOs were in the process of injecting additional capital, seeking reduction or reclassification of functions as well as undergoing mergers and acquisitions.

“The final list of CMOs who meet the September 30, 2015 deadline would be uploaded to the SEC website after proper capital verification has been conducted. The general public should further note that any CMO that fails to comply with the September 30, 2015 deadline will cease to operate in the Nigerian capital market,” the statement said.

SEC had announced the new capital requirement in December 2013 with December 31, 2014 as the deadline for compliance.

Few days to the deadline, it however approved an extension of nine months, fixing a new deadline of September 30, 2015.

This followed repeated calls by operators for an extension, and possibly a review of the capital requirement.

The operators had argued that insisting on the deadline and withdrawing the licences of those who fail to meet the deadline would throw the market into crises, especially as it had been hit by several challenges, which led it to perform poorly.

Under the new minimum capital base, the capital requirement for brokers/dealers was increased from N70m to N300m. That of brokers was raised to N200m from N40m, while that of dealers was hiked to N100m from N30m.

The minimum capital requirement for issuing houses was increased from N150m to N200m, while that of underwriters was raised from N100m to N200m. Registrars saw their minimum capital requirement increased to N150m from N50m, while the requirement for trustees was increased to N300m from N40m. Rating agencies were not left out as their minimum capital requirement was increased to N150m from N20m.

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Source : Punch

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