Post Views: 186 The Nigerian Stock Exchange (NSE), at the weekend, called for inputs into a new rule regarding the opening, operation, and closure of ...
The Nigerian Stock Exchange (NSE), at the weekend, called for inputs into a new rule regarding the opening, operation, and closure of brokerage accounts for minors or investors under the age of 18.
The rules is to define “custodial account for minors, custodian’s qualifications, rights and responsibilities, KYC (Know-You-Customer) requirements, joint custodians, disputing custodians, custodian’s powers and functions, conversion of account, maintenance of records, notification of obligations, conduct of custodians, and sanctions.”
The need for such rules, the NSE said in a notice by Tinuade Awe, General Counsel and Head of Regulation at the NSE, became necessary, following “a complaint received from an investor alleging the unauthorized sale of securities belonging to both the investor and her son who is a Minor, by the investor’s estranged husband.
A review of the Rules and Regulations Governing Dealing Members indicated that there are no existing rules that address the subject, as a result of which the NSE noted the need “to introduce a framework regarding brokerage accounts for Minors, in order to provide guidance for Dealing Members and investors who wish to operate such brokerage accounts for Minors.”
Also, the NSE said it has observed an increase in the violation of its Rule 1.15 prohibiting dealing member firms (stockbrokers) from offering and engaging in “any form of guaranteed returns on investment in securities.”
Given the huge risks involved and noting the lack of any sanction for violation which has led to significant loss of investment and investor confidence in the capital market, the proposed amendment seeks to introduce sanctions for violation of the Rule, to enable stakeholders be part of the rule making process via a review of the draft Rules.
A notice by the NSE set a deadline of Monday, December 18, 2017, for submission of such comments, just as the draft rules “are subject to the approval of the National Council of The Exchange, and the Securities and Exchange Commission.