Stockbrokers’ margin and underwriting loan exposure is being addressed by the Asset Management Corporation of Nigeria (AMCON), Central Bank of Nigeria (CBN), Ministry of Finance, Nigerian Stock Exchange (NSE) and Securities and Exchange Commission (SEC), given its importance to the state of the capital market, new information reaching BusinessDay has revealed.
The Securities and Exchange Commission which made the disclosure said :”The margin loan exposure not only depends on the original size of the exposure, but also on the specific terms of the margin transactions, the interest rate environment and the evolution of stock prices. Itt also depends on the efforts of individual firms to address their obligations.”
Arunma Oteh, director-general, SEC, had disclosed in Lagos on Tuesday at a media briefing on the Nigerian capital market, that this year, SEC would continue to explore ways of alleviating the impact of margin loans on the market, either by way of forbearance and debt forgiveness, to revitalising the firms, improving liquidity and restoring investor confidence in the equities market.
She also assured that SEC was undertaking a number of initiatives to encourage and boost participation by Nigerian retail investors, adding that in 2011, SEC facilitated the refund of about N200 million by market operators in cases of breach of contractual agreements and non-refund of money to investors.
“We penalised 14 fund managers for non-rendition of returns, while one case involving mismanagement of funds was earmarked for enforcement action. We successfully resolved 709 out of the 1,393 complaints,” Oteh added.
As at last year, only 16 new market operators received operating licenses to function in various capacities, out of a total of 131 applications that were filed with the SEC. “This level of scrutiny prevents individuals with poor or low levels of expertise,” the commission added.
