Nigerian Stock Ex-change, NSE, Wednesday, suspended 57 stockbroking firms from operating in the stock market for their failure to meet the minimum capital base.

The spokesperson and Senior Manager Corporate Affairs of the NSE, Mr. Wole Tokede, confirmed to Vanguard on phone that the list of the affected firms as contained in its website was authentic, adding that an official statement has not yet been made to the press.

According to the NSE statement, “we have today (Wednesday) suspended the following stockbroking firms for failing to meet the statutory equity capital requirement.”

Meanwhile, the Interim Administrator of the NSE, Mr. Emmanuel Ikazoboh, had last week warned stockbroking firms to recapitalise or face sanction.

He disclosed that most of the stockbroking firms had been operating their businesses with investors’ funds, which was not in the best interest of the market.

According to him, dealing members must increase their capital base or face sanctions. He attributed the development to the need to protect the interest of investors. “Investors are crucial to the growth of the market, and must be protected,” he said.

He said: “Firms owe it a duty to safeguard the interest of the investors,” adding that the rules put in place to defend investors would not be ignored. He said firms have been told to inject more funds to prevent abuse of investors’ funds and observed that firms were facing liquidity problems, and were using investors’ accounts to cover up.

“The issues are having strong implications on the market that is recovering from shocks,” he added.

Based on these, there is the need for holistic views on issues that permeated the market in recent times”.

Meanwhile, the names of the suspended firms include : Afrinvest West Africa Limited, BGL Securities Limited, Diamond Securities Limited, Cashville Investment & Securities Limited, UBA Stockbrokers Limited, Adamawa Securities Limited, Intercontinental Securities Limited, Alangrange Securities Limited, Associated Asset Managers Limited, Belfry Investments And Securities Limited, Calyx Investment & Securities Limited, Cardington Securities Limited, Century Securities Limited, Colvia Securities Limited, Consolidated Investment Limited, Cowry Asset Management Limited, Dakal Services Limited, DBSL Securities Limited, De-lords Securities Limited, Dependable Securities Limited, Empire Securities Limited, Enterprise Stockbrokers Plc., ESS Investments And Trust Limited, Eurocomm Securities Limited, Express Discount Asset Management Limited, FBC Trust And Securities Limited, First Inland Securities & Asset Mgt Limited, First Allstate Securities Limited, First Equity Securities Limited, FIS Securities Limited, Genesis Securities & Investment Limited, Heartbeat Investment Limited, Hedge Securities & Investment Co. Limited, Independent Securities Limited.

Others suspended include: 34 Lion Stockbrokers Limited, MBL Financial Services Limited

Midland Capital Markets Limited, Molten Trust Limited, Nigerian Stockbrokers Limited, Peninsula Asset Management And Investment Company Ltd, Perfecta Investment Trust Limited PIPC Securities Limited, Pivot Trust & Investment Company Ltd, Professional Stockbrokers Limited, 44 Quantum Securities Limited, Rostrum Investment & Securities Limited, Securities Solutions Limited, Securities Trading & Investment Limited, Sigma Securities Limited, Sikon Securities & Investment Limited, Supra Commercial Trust Limited, Support Services Limited, TFS Securities & Investment Co. Limited, Valmon Securities Limited, Vision Trust & Investment Limited 56 Wizetrade Cap & Asset Mgt Limited and Yobe Investment & Securities Limited .

It will be recalled that in 2008, the Securities and Exchange Commission (SEC), in conjunction with the NSE directed the firms to increase their capital base from N20million to N1billion. The two bodies thought that the firms would be able to meet the requirements for growth. But they were proved wrong.

Few weeks after, the issue generated controversy in the market. Stakeholders were pitched against one another, condemning the idea. Broking firms were the first to condemn the idea. They considered the amount as too outrageous. They saw it as a big task.

Incidentally, then the regulators failed to achieve their objectives of ensuring that broking firms provide the capital base of N1billion. This made the regulators to reduce the recapitalisation fees to N70million. The idea failed. Years after, many firms are yet to provide the N70million. Though some firms met the requirements, the percentage was not encouraging.[color=#990000][/color]

I can see some states security firms here. Does it mean those states don't value their firms that they failed to recapitalise and allowed to be suspended?

questions: how many stockbroking firms are left? what happens to the trapped investors fund managed by these suspended firms?