TRANSACTION on the Nigerian Stock Exchange (NSE) last week started on a shaky note, when rumour filtered into the trading floor of the market that the council of the Exchange was bent on suspending some brokerage houses who failed to shore up their capital base requirement to N70 million.The stockbrorage firms had hitherto during the preceding week embarked on a save- our-soul mission to try to explain to the Self Regulatory Body (Exchange), the need to put its decision in abeyance pending the time the situation in the market would improve as most of them had made huge losses during the market meltdown between 2008 and 2009 financial year. But the plea of the dealing members seems to have falling on deaf hears, as the council of the Exchange on Tuesday in one fell swoop suspended about 60 brokerage firms from further trading on the floor of the market pending the time they are able to meet their new capital base requirement.The Securi-ties and Ex-change Commission (SEC) had penultimate week reeled out to the market community that, for the Exchange to rub shoulder with other Exchanges around the globe, there was need for members who were the operators to increase their financial base from N20 million to N70 million.The Commission through its Director General, Ms. Arunma Oteh, said the Nigerian capital market was fast becoming a major player in both African continent and the world, and hence capital adequacy for dealing members in the stock market must not be treated with levity.She said for local and institutional investors to have assurance in the stock market coupled with the present reform in the market, operators must be well endowed with their own funds.The NSE had in recent times sent out a circular due to complaints from investors, that brokerage firms must separate investors money from their companies fund, as this would ensure transparency and accountability.It will be recalled that the NSE also recently asked operators in the market to meet the capital base set or risk being suspended from further activities in the market.The directive, which was given by Sole Administrator of the exchange, Mr. Emmanuel Ikazoboh, said that some of the stockbrokerage firms had had their capital base eroded by margin loan debt.He said the exchange was out to ensure investors whose accounts were being used by some dealing member firms continue to operate because they did not have funds any more, stating that they had been told to introduce more cash capital rather than use investors money to run their businessesInvestment hanging in a balance While the NSE may have released its big hammer on the erring dealing members in the market, investors are definitely the worst hit in the whole game of trying to whip the operators into line to conform with the new mode of operations in the stock market.The dealing members will no longer be able to access the trading machine of the Exchange and consequently for those investors whose accounts are domiciled with the suspended brokerage firms will not be able to make transaction by either selling or buying shares in the market.Another major set back for investors in the market is that most of them who use their holdings in offsetting fees, now that schools are resuming, will find it difficult to do so except they go borrowing.For the brokerage firms, these are indeed no good times for them, as most of them are bound to lose their clients who in the course of their face off with the NSE are expected to withdraw their accounts and take them to safer zone to avoid any eventualities.The backlog of the ripple effect of the suspension of the brokerage firms will definitely be having its stake on the market even as the indicators in terms of volume and value are also expected to suffer more.NSE earlier stanceWe are taking this action because it is only the way we can protect investors. And we are also protecting the brokers themselves. We have a situation where some of them as a result of margin loan have had their hands burnt, and therefore their capital was completely eroded. We cannot because of that fold our hands and allow them to continue to operate because they will continue to use their investors funds to operate, Professor Ndi Okereke said.NSE assures of investment safety Afraid of the backlash of its suspension of 61 dealing members, the Nigerian Stock Exchange (NSE) has assured investors who are clients of the stockbroking firms of safety of their investments.Investors in equities on the capital market had on Thursday, following the release of the names of the affected companies, besieged the market, seeking to know the fate of their holdings.The Interim Administrator of The Exchange, Mr. Emmanuel Ikazoboh, who gave the assurance on Thursday in Lagos also dismissed the allegation by some of the affected stockbroking firms that The Exchange did not give them enough time to beef up their capital base before suspending them. He described the allegation as baseless.Speaking on the security of investors, Ikazoboh said The Exchange on January 18, 2011 issued a circular to remind all suspended Dealing Members Firms of their duty to instruct and appoint another stockbroker to carry out the mandate they had got from their clients prior to their suspension.In addition to this, the NSE boss pointed out that section e of the Article 57 of the Rules and Regulation Governing Dealing Members ensures that: The Dealing Member shall do everything possible to ensure that its innocent clients do not suffer any loss or embarrassment as a result of the suspension. The circular, he said, informed the affected firms that the Exchange would not tolerate any complaint against any Dealing Member Firm for failing to carry out instruction received by the firm prior to the suspension.The Interim Administrator reiterated that it was unfair for any of the affected stockbroking firms to claim that the new capital base was suddenly imposed on them, stressing that the Securities and Exchange Commission (SEC), the apex regulator of the nations capital market, had, since December 2005, raised the minimum share capital for stockbroking firms from N20 million to N70 million.Since 2005, this has been fixed and operators were expected to have complied with this long ago. We believe this is the right thing to do in the interest of investors, the market and the nations economy as a whole. We want to gain back investors confidence in the market and one of the ways of doing this is to ensure that all rules put in place are obeyed by all. Ikazoboh said.Equity Transaction Mondays transaction in the shares of banks enhanced total volume of shares traded in the day, as investors swooped 700.1 million valued at N5.8 billion done in 10,141deals.However, the twin market indicators, the All share index slide by 137 basis point or 0.5 per cent from 27,267.17 recorded on Friday to 27,130.17 while market capitalisation fell by N43billion from N8, 711 trillion to N8, 668trillion.The decline in market indices was attributed to profit taking by investors. According to experts, investors are leveraging on the capital appreciation recorded in the last few weeks to recoup their investment.A review of the market on Monday showed that, the banking subsector dominated in volume terms with 582 million shares worth N4.8 billion in 5,798 deals. The insurance subsector followed on the list with 33.4million units worth N24.4million in 288deals. The conglomerates ranked third with 15.7million units worth N64.4million in 254deals.A breakdown of activities in the banking subsector showed that Zenith bank Plcs 136million shares worth N2.1billion energised activities in the banking subsector while Bank PHB Plcs 50.8million units worth N112.2million followed in 360deals.Further analysis of the days trading showed that 42 stocks depreciated in price, in percentage change, led by FTN Cocoa with five per cent to close at N0.57 per share while UAC Properties followed with five per cent to close at N17.10 per share respectively.Starcomms, Sterling bank, Oceanic bank lost five per cent, 4.96 per cent and 4.90 per cent to close at N1.33, N2.68 and N3.30 per share.On the other hand, Goldlink insurance topped the gainers list in percentage change with 4.92 per cent to close at N0.64 per share. Constain West African trailed with 4.87 per cent to close at N7.97 per share.Major equity transaction on Tuesday took a different curve, tumbling in prices, even as the twin market indicators on the Nigerian Stock Exchange (NSE) dropped by 0.7 per cent or N57 billion.The depreciation in activities in the market is said to be occasioned by massive profit taking by investors who are catching on capital appreciation in the shares of listed companies.A review of Tuesdays transaction showed that highly capitalised stocks comprising 73 companies recorded price depreciation while 25 others depreciated in price.At the close of transaction on Tuesday, Nigerian Breweries Plc topped the days losers table with 300 kobo to close at N90.00 while Oando Nigeria Plc followed with 190 kobo, to close at N74.10 per share. Ashakacement Company Plc, Betaglass and NAHCO Plc also lost 100 kobo, 77 kobo and 55 kobo to close at N28.00, N14.81 and N10.67 per share.On the other hand, Guinness Nigeria Plc emerged the days highest price gainers with 1000 kobo to close at N210.08 per share. Unilever Plc followed, adding 49 kobo, to close at N28.60 per share. Longman Plc, UBA Plc and International Breweries Plc added 36 kobo, 33 kobo and 25 kobo, to close at N7.66, N10.44 and N5.90 per share.
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