SEC Issues Minimum Capital Base For Market Operators | Bizness Watch

SEC Issues Minimum Capital Base For Market Operators

The board of the Securities and Exchange Commission (SEC) has approved a new minimum capital requirements for all categories of capital market operators.The regulatory body approved the minimum capital for market operators pursuant to Section 313(6) of the Investments and Securities Act (ISA) 2007.

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

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. Recall that some of the operators lost their capital during the global meltdown and margin loan.

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 managers’ minimum capital requirement has been raised from N20 million to N150million.

Analysts are of the view that the recapitalisation is on the high side considering the intermediation role of market operators.




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