In a bid to maintain the integrity of the capital market and further protect investors in Nigeria, The Nigerian Stock Exchange (NSE) has formally announced its intention to sever all connections with any Dealing Member Firm that is inactive for six consecutive months. The intention is being pursued through a Securities and Exchange Commission (SEC) approved rule that authorizes the NSE to revoke the Dealing Member Licences of such inactive firms. The SEC approved Rule provides that where a Dealing Member
Firm is inactive for six consecutive months, The Exchange shall revoke its licence. The circumstances of the inactivity are further categorized into voluntary and involuntary inactivity. Ms. Tinuade Awe, Head of The Exchange’s Legal and Regulation Division, explained that voluntary inactivity occurs where the Dealing Member Firm has not engaged in any trading activity for a consecutive period of six months without being suspended by The Exchange or The SEC.
The Rule provides further that The Exchange shall forthwith revoke the licence of any Dealing Member Firm that falls into this category. Involuntary inactivity occurs where a Dealing Member Firm has been suspended from trading activities by
The Exchange or the SEC by reason of any infraction committed by that Dealing Member Firm and it has
not carried out any trading activity within the stipulated six months period.
Awe noted that “The powers of The Exchange under this SEC approved Rule will be exercised judiciously and will take into account all the circumstances surrounding each individual case as well as the interests of all stakeholders, particularly the investors. She observed that the majority of the prohibited practices in the market have been linked to inactive firms and so it is important to stress that the new rule is aimed at further sanitizing the market to protect investors.
Mr. Olufemi Shobanjo, the Head of Broker Dealer Regulation at the NSE mentioned that the NSE in exercising its regulatory authority over Dealing Member Firms shall continue to use the utmost care and diligence. He noted that the NSE is keen to entrench the required catalysts to stimulate and build a healthy and well regulated market so as to stimulate increasing levels of investor confidence in the