By Dipo Olowookere
Stockbrokers operating in Nigeria have been authorized to suspend or close accounts of any of their clients suspected to be used to carry out fraudulent transactions, Business Post reports.
This authority was given to the brokerage companies by the Nigerian Stock Exchange (NSE) under its new guidelines for the establishment and operation of online trading portals by the dealing members.
These rules were in August 2019 approved by the Securities and Exchange Commission (SEC) after the NSE forwarded them to the apex capital market regulator.
Over the weekend, the NSE said it came up with these guidelines to make transactions on its platform easier and safer so as to further boost confidence of investors on the market.
Under the new rules, the stockbrokers were informed that they have the powers to close any online trading account opened by investors on their platforms if such is used for fraud, money laundering or market abuse.
“Dealing members operating an online trading portal shall suspend or close a client’s account where the dealing members become aware that such account is being used for fraudulent transactions, money laundering, market abuse, and any other illegal purpose and notify the exchange of such account suspension or closure within 24 hours of the action,” a part of the rules said.
In the new guidelines, brokerage firms were directed to “clearly display on the online trading portal all fees and charges (if any) associated with the usage of the online trading portal, as well as the details for customer service and the complaints management procedure.”
They are not required to “share commissions from trade transactions effected via the online trading portal except with other dealing members and such other registered market operators as the exchange may from time to time specify.”
It was emphasized that where in the sole discretion of the NSE, a security breach has occurred through a dealing member’s online trading portal, which puts the market at risk, the exchange may direct the dealing member to shut down its online trading portal, or take any other appropriate measures it may in its discretion determine, including but not limited to shutting down the electronic link between the online trading portal and the NSE’s trading facilities and/or other facilities.
‘Any dealing member firm that contravenes any of the online trading portal rules shall be liable to pay a fine of not less than N250,000 and such other penalties as may be prescribed from time to time by the NSE,” the new guidelines said.
Adedapo Adesanya