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SEC Slashes Capital Market Fees But Raises Capital Requirement for Market Operations
The cost of transactions on the Nigerian Stock Exchange, including stock purchases and sales, was recently slashed by the market regulator, the Securities and Exchange Commission.
Obviously responding to repeated calls for a moderation of the transact fees, SEC announced cuts that amount to a consolidated average reduction of about 40% on transactions. This reduction is expected to spur increased market activity. To see all details of the revised rated, click here.
The key market operators, however, do not have a similarly pleasant story to tell. The reason is that their minimum paid-up capital requirements have been significantly hiked up and this is coming on the heels of an earlier raise in year 2005.
Described by SEC as an effort at repositioning operators as part of the Governments reform process, the re-capitalisation process will terminate 31st December, 2008. Only operators that have met the requirement by that date will remain licensed to operate.
Though this development throws up serious challenges for the operators. It is however expected to strenghten the market by giving birth, at the end, to only well-funded players. Market discipline and operational capacity would thrive better within that framework. Details of the new capital requirements are as follows:
| Operator Category |
Current Minimum Paid-up Capital (N) |
Expected Min Paid-up Capital by 31/12/08 (N) |
| Issuing House |
150 Million |
2 Billion |
| Brokers/Dealer |
70 million |
1 Billion |
| Trustees |
40 Million |
40 Million |
| Fund/Portfolio Manager |
20 Million |
500 Million |
| Corporate Investment Adviser |
5 Million |
5 Million |
| Registrars |
50 Million |
500 million |
| Rating Agency |
20 million |
20 Million |
| Corporate Sub-broker |
5 Million |
50 Million |
| Underwriter |
100 Million |
2 Billion |
| Market-maker |
- |
2 Billion |
| Consultant Individual |
0.5 Million |
0.5 Million |
| Consultant Partnership |
2 Million |
2 Million |
| Consultant Corporate |
5 Million |
5 Million |
| Individual Investment Adviser |
0.5 Million |
0.5 Million |
| Venture Capital Manager |
20 Million |
20 Million |
| Commodities Broker |
40 Million |
40 Million |
| Capital Trade Point |
20 Million |
20 Million |
| Stock/Commodities Exchange |
500 Million |
500 Million |
| Clearing/Settlement Agency |
500 Million |
1 Billion |
| Receiving Banker |
As stipulated by CBN |
As Stipulated by CBN |
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