The Nation Newspaper

Tag: Brokers

  • Two brokers delisted, one suspended

    The Chartered Institute of Stockbrokers (CIS), the statutory regulatory body for the stockbroking profession in Nigeria, has delisted two of its members from its register as institute continued efforts to maintain professional integrity.

    The two stockbrokers Peter Temidayo Ola and Mr. Kingsley Okwudiri Nnaji, were deregistered and barred for life from practising as stockbrokers for alleged involvement in unprofessional conducts. Another stockbroker, Mr. Akinwale Olagundoye, was suspended from trading in the Nigerian capital market for six months. He has however, appealed against the decision.

    The deregistration of the brokers followed the judgment of CIS Disciplinary Tribunal, which found them guilty of various offences. The CIS Tribunal is saddled with adjudicating and enforcing market practices and rules with a view to protecting investors in the market. Justice George Oguntade (rtd)is the legal assessor to the tribunal.

    In the judgments of the tribunal made available by Secretary of the tribunal, Ola was found guilty of infamous conduct contrary to and punishable under Regulations 5(vi), 5(vii) and 5 (xii) and section 11(1)(a) of the CIS Act of 1992.

    Four count charges were brought against Ola, including the collection of money from persons with the pretence that he had shares to sell; conniving with securities houses not registered with the Securities and Exchange Commission (SEC) and Nigerian Stock Exchange (NSE) to defraud unsuspecting investors.

    According to some of the charges, Ola was alleged to have between May and June 2009 collected N320, 000 from two persons under the false pretence that he had shares of Friesland Campina Wamco Nigeria when he knew he had none to sell.

    Nnaji, was deregistered because of infamous conduct for which the Disciplinary Committee of the Exchange had already found him guilty and his dealership clerkship withdrawn since last year.

    After reviewing the decision of the NSE committee, the tribunal affirmed that the conduct of Nnaji was of such magnitude that warranted the penalty given by the Exchange.

    However, Nnaji could appeal for relisting of his name if the decision of the NSE against him is reversed by an appellate tribunal.

  • Brokers mull funding options for housing, energy sectors

    Brokers mull funding options for housing, energy sectors

    Stockbrokers are considering suitable financing products to align the capital market with the huge financing requirements of the housing and energy sectors.

    President, Chartered Institute of Stockbrokers (CIS), Mr Ariyo Olusekun, who spoke on the preparations for the forthcoming capital market workshop, said the capital market has huge capacity to fund large capital intensive projects in the housing and energy sectors.

    He said stockbrokers would use the forthcoming gathering to brainstorm on financing products that meet the requirements of the sectors.

    “We all know the position of our power sector today and this is an avenue for us as brokers to bring experts in this industry together and create products that will suite needs. We want to come up with a product that will enable developers to raise funds to develop more housing unit so that everybody can solve their housing problems,” Ariyo said.

    According to him, stockbrokers would work to develop products and services that would help to unlock the potential in the power and housing sectors.

    He noted that the Nigeria capital market is big enough to provide funds for housing and energy sectors pointing out that people did not believe that Nigerian banks can fund the kind of projects they are funding now, the same situation that applied to the capital market.

    “I want to assure you that this market is big enough to finance any project, we have been clamouring for high-intensive sectors of the economy to come and list in the market and we are assuring that when they come they would be able to raise the money needed,” Ariyo said.

    Citing the pension funds of about N3.4 trillion, he said the challenge for capital market operators is to come up with investment instruments through which these funds can be invested and used to generate growth in the economy.

    Also, Chairman, CIS’s Sub-committee on the National Workshops, Mr Bisi Oni, said brokers were focusing on the power and housing sectors because they are the two areas of pressing needs for most Nigerians.

    “The stock market has ability to solve the funding problems in the sectors. At the end of the workshop, we believe we will be able to create products that will be tradable on the floor of the Nigerian Stock Exchange (NSE),” Oni said.

    The workshop is slated for July 2, in Abuja. Expected dignitaries include President, Dangote Group, Ahaji Aliko Dangote; Dr. Oba Otudeko, Mr Tony Elumelu, Ministers of Finance, Housing & Urban Development, Environment, Petroleum, Trade & Investment and Power and other key players in economy.

     

  • Brokers decry NAICOM’s registration fee

    Brokers in the industry have condemned the increase in brokers licence processing fees from N1million to N2.5million by the National Insurance Commission (NAICOM).

    The brokers, who spoke on condition of anonymity, also accused the commission of frustrating them out of business.

    One of the brokers said insurance brokerage is one area that enables chartered insurance practitioners to practice, but with the new fee, it has become difficult for prospective brokers to practice in the field they choose to.

    He said: “The new licensing fee can be seen as a barrier to anybody willing to practise as a broker. This kind of fees does not abound in other professions like accountancy, law, estate surveyors, quantity surveying among others.

    “If the regulator wants to deepen insurance penetration and increase awareness, then we need skilled and knowledgeable people and the new fees does not encourage this.”

    A female broker, who also spoke on condition of anonymity, said this kind of regulation can be frustrating to people wishing to take part in the profession.

    She noted that though the new fees do not directly affect brokers who have been practising, it affects professionals in the industry.

    But Assistant Director, Corporate affairs, NAICOM, Mr. Rasaaq Salami, said the new fees which took effect from January 1, this year only affects new brokers.

    The commission, as part of efforts aimed at effective service delivery, directed that registration of new brokers by the Commission would henceforth be done in two batches yearly.

    The commission said: “Consequently, operating licences to successful applicants in the first batch would be issued on June 31 of each year, while the second batch shall be issued on December 31 of the same year.

    “For applications falling due in the first batch, all relevant documents are expected to reach the commission not later than March 31, while those for the second batch should have been received in the Commission on or before September 30 for processing.

    ‘’Applications and support documents received after March 31 or September 30, shall be treated as part of the next batches for consideration in the succeeding second half of the year.’’

     

  • Brokers caution investors on market volatility

    stockbrokers have cautioned investors to be wary of market’s extreme upswings and downswings due to the recent introduction of 10 per cent daily price change for all stocks on the Nigerian Stock Exchange (NSE).

    Market operators said market appears to be more volatile for an everyday investor who ordinarily is not psychologically prepared for losing or gaining 10 per cent in a day.

    According to operators, when compared to the fixed income segment of the capital market, an investor can lose 10 per cent he got at the end of one year investment in the fixed income market in just one day if such is invested in the capital market.

    However, some operators opined that the remarkable improvement in the fundamentals of the equities market and recovery of the secondary market have increased the confidence of the domestic investors.

    Chief Executive Officer, Lambeth Trust & Investment Company Limited, Mr David Adonri, said declining yield on fixed income securities has led to migration of more domestic investors to equities.

    “This accounts for the increasing percentage of domestic investors participating in the equities market. Foreign investors are not actually participating less, if you consider CBN report on foreign portfolio investment inflow but rather, domestic investors are participating more,” Adonri said.

    According to him, the accelerated growth in equities especially in first quarter was facilitated by several positive factors together with high expectations from investors.

    He, however, noted that the market ought to attain its highest point within the second and third quarters of the year, based on seasonal antecedents.

    President, Association of Stockbroking Houses of Nigeria (ASHON), Mr Emeka Madubuike, cautioned that investors should not be carried away with the present price movement but that they should invest in equities with sustained growth of more than five years.

    He pointed out that such stocks would not be seriously affected by prolong lull in the capital market noting that there has been an upsurge in the number of short-term investors in the capital market.

    He cautioned that investors should not be influenced by greed to avoid burning their fingers.

     

  • Brokers to pay N2.5m for revoked licence

    NATIONAL Insurance Commission (NAICOM) has warned that any broker that loses its licence as a result of infraction would be asked to pay a penalty of N2.5 million.

    The Commissioner for Insurance, Fola Daniel, made this known at the council meeting of the Nigerian Council of Registered Insurance Brokers (NCRIB) in Lagos.

    He urged brokers to avoid anything that would make NAICOM revoke their licences, adding that any broker who subverts the industry’s rules and has his licence revoked, would pay the new processing fee of N2.5 million.

    Meanwhile, the President, NCRIB, Mrs Laide Osijo, has appealed to brokers to cooperate with NAICOM in the implementation of the new premium regime, stressing that they should avoid any infraction that might lead to sanctions.

    She stressed that the council had gathered from members and underwriters that the public and government were already adjusting to the new premium rule. She called on insurance operators to embark on enlightenment of client on the new rule.

    She said: “Reports reaching us from the underwriters and brokers indicate an adjustment to the new rule by insurance clients, including the government.

    “From my findings, it has become necessary to advise brokers to cooperate with NAICOM in the implementation of this rule as well as avoid any infraction that may lead to sanctions by the commission.”

    Osijo said the ‘no premium no cover’ is the best thing that can happen to the insurance industry. She said: “The money in our hands is better than expectations; it beats our imaginations. So many brokers have testified to the workability of the policy. You can’t believe the amount of premium we have received in my office this year so far as a result of the policy because we refused to give them cover on credit.”

    She insisted that the law is there and has come to stay for the good of the national economy, the insured as well as the operators in the insurance industry in the country. She said: “It is a fantastic thing happening to the insurance industry and it is going to benefit everybody, whether you are an underwriter or a broker, even the public, because if you pay your premium on time, nobody will tell you stories the moment your claim falls due.”

  • More brokers opt for debt forbearance

    More brokers opt for debt forbearance

    • AMCON offers concessions to reluctant dealers

    • Industry faces consolidation

     

    More highly indebted stockbroking firms are opting for debt forbearance from the Asset Management Corporation of Nigeria (AMCON) as broker explore opportunities of business combination to deepen capital and competencies.

    The Nation’s investigation showed that the number of stockbrokers that have opted to take debt forbearance has risen from 54 to 59 stockbrokers, leaving 25 indebted brokers yet to embrace the bailout.

    A source close to AMCON said the total forbearance value would be about N11 billion, which represents the difference between the N27 billion value of securities paid by the corporation and current value of about N16 billion.

    According to the source, AMCON will open a window of dialogue with the remaining stockbrokers to find out their constraints and amenable ways of resolving the debts.

    The source hinted that the corporation might consider the possibility of granting certain concessions and flexibility that could encourage the brokers to quickly resolve their outstanding debt overhang.

    “There is a possibility that those (brokers) that do not accept the forbearance want to pay or come for discussions because of the strict conditions attached to the forbearance deal. But AMCON is open for discussions, the brokers can and discuss how they want to pay,” she said.

    The increasing recourse to forbearance came on the heels of increased tempo of business combination in the stockbroking industry.

    Market sources and official reports indicated that stockbrokers might have evolved self-induced business consolidation to enhance the competitiveness of the trade group and build up enormous capital and other resources needed to compete with foreign and domestic investment banking and advisory firms.

    Official report from the Securities and Exchange Commission (SEC) showed increasing requests for business consolidation among stockbroking firms.

    Market sources said they expected the number of stockbroking firms to reduce considerably in the period ahead as more business combinations come to fruition.

    According to sources, stockbrokers, who are mostly sole proprietorships, are now more than before open to discussions on mergers and acquisitions, given the shrinking operating space for small firms in the industry.

    There are 300 stockbroking firms trading at the Nigerian Stock Exchange (NSE). Stockbrokers earn barely four per cent as total brokerage on complete buy and sale stockbroking transaction.

    Although several stockbrokers are registered for other functions such as corporate finance and investment advisory, they face strong competition from banks, insurance and other financial services companies, which provide similar functions.

    Besides, regulatory requirements stipulate different capital for each function, which limits the capacity of small firms from adding functions to their basic stockbroking licence.

    A market source pointed out that though the risk-based capital requirement regime being proposed for the industry may still allow small firms, the convergence of foreign and domestic big players would continue to put pressures on small firms.

     

     

     

     

     

     

  • Nigerians advised to use brokers

    Nigerians have been urged to patronise registered brokers when taking insurance covers.

    General Manager (Technical), Relics Insurance Brokers Limited, Mr Festus Alikwe, said it is better and safer because the registered brokers are experts and will give good advice.

    He said: “For those seeking to take up insurance cover for their properties, businesses and even those seeking to take up life insurance covers, they should do so through qualified and registered insurance brokers.”

    He said this is important because brokers understand the technicalities of the business more than the intending client, adding that this is for the good of the client.

    Alikwe told The Nation that the way brokers see insurance firms is not the same way the prospective clients who are not insurance experts, see them.

    He said if an intending client goes s to an insurance company, it is still the same amount of premium he will have to pay if he goes through the brokers.

     

     

     

  • Brokers to partner agents on micro insurance

    Insurance brokers initially opposed to the revival of the agency system introduced by the National Insurance Commission (NAICOM) are ready to work with the agents.

    A source, who asked not to be named, said brokers were working out ways to partner agents to harness the enormous micro-insurance opportunities at the grassroots.

    NAICOM introduced the agency system to expand the insurance market and to bring its services and benefits nearer to a greater percentage of the population.

    A source at the Nigerian Council of Registered Insurance Brokers (NCRIB) said some brokers were looking at how they could partner, or synergise with some agents. He added that the brokers were looking at how they ccould integrate the agents under their brand to reach the grassroots.

    Worried by the untapped micro-insurance opportunities, put at over N60 billion, NAICOM said it was working on a draft guideline for the entrenchment and development of the business.

    Commissioner for Insurance Fola Daniel said the draft guideline on micro-insurance was being exposed to the industry, experts and other stakeholders for their input and contributions. He said, thereafter, the final draft would be drawn and released to the market.

    He said the commission intended to collaborate with other regulatory agencies in achieving the plan.

    He said: “To underscore our commitment to the development of micro-insurance, the commission has conducted a nationwide diagnostic study on micro-insurance in collaboration with GIZ, a German agency for sustainable development, Access to Insurance Initiative (AII) and local consultants.

    “We have also put in place a draft guideline for micro-insurance business. The draft is being exposed to the industry, experts and other stakeholders for their inputs and contributions before the final draft will be drawn and subsequently released to the market,” he said.

    Daniel noted that the initiative is part of the commission’s drive to open up and develop the insurance market at the grassroots, and, by extension, increase the sector’s contribution to the Gross Domestic Product (GDP).

     

  • Brokers protest slash in Local Content briefs

    Brokers protest slash in Local Content briefs

    Brokers have kicked against the reduction of firms handling local content briefs for the Nigerian National Petroleum Corporation (nnpc).

    The corporation, which engaged 34 firms for the exercise last year, cut down the figure to 14 this year, a measure operators criticised as anti-industry growth.
    President, Lagos Area Committee of the Nigerian Council of Registered Insurance Brokers (NCRIB), Tunde Oguntade, said though the number fell below brokers’ expectation, they have expressed their desire for more brokers to be involved in the future.

    He noted that brokers are unaware of the reason for the reduction, adding that it would have been better if more brokers were considered in line with the Local Content Law.
    Nonetheless, the implementation of the law has begun to have impact on the economy in terms of human capacity development, especially in oil and gas, more employment opportunities and greater retention of capital that would have been spent as consultancy fees and salaries for expatriates.

    Of interest is the current development in the industry, where underwriters and insurance brokers have shown greater capacity to insure and reinsure the high net-worth property of government and its agencies, as well as those parastatals.

    A university don, Mrs.Joy Warikke-Briggs, said the development, notwithstanding, the insurance industry remained one of the greatest beneficiaries of the Local Content Act, signed into law by President Goodluck Jonathan in 2010.

    She told The Nation that through the local content law, the government is seeking improved standard of living of the citizens and higher revenue to government from company and personal income taxes. She added that the resultant economic growth therefrom, would be in form of increased production of goods and services, higher industrial capacity utilisation, direct and indirect employment generation, as well as improved commercial and trading activities.

    The NCRIB boss called on the government to encourage the participation of more brokers in NNPC insurance since the business is of high volume.

    He said: “One cannot say the reduction is healthy looking at the Local Content Act. They have the right to appoint; it is only the government that can decide if what they have done is in order. Ideally, they should have accommodated more brokers given the volume of money involved in the business.”

    He noted that to meet the 70 per cent engagement provided for by the Local Content Act, brokers who were denied opportunities in the past have strengthened their operations.

    He said only 34 of 572 brokers were appointed for the business last year, adding that though the number was low, it created opportunity for the brokers to acquire knowledge on the workings of the oil and gas business.

    “Years past, it used to be Lloyd of London that handled the account and repatriated all its gains, leaving the Nigerian economy high and dry. That is now history because the Local Content Law has effectively put paid to that, Mrs. Warikke-Brigs, said.

    Suing for the appointment of more indigenous brokers to handle the account, Oguntade argued it would boost the industry’s capacity for growth.

    He said local underwriters have a very good share of the market. “We are looking at 70 per cent as stated in the law, that means that the 70 per cent premium that used to go outside the country in the past, now hasve to be with local underwriters.

    “This would enable underwriters to improve their capacity, training, source good rates and observe their corporate social responsibilities.