NSE Stops Issuing New Licenses to Stockbrokers, Backs Merger

By Modupe Gbadeyanka

Any new company intending to obtain a licence to operate as a stockbroker in the Nigerian capital market may have its request turned down by the regulator.

This is because the Nigerian Stock Exchange (NSE) has stopped issuing new licences to brokers. It has instead asked newcomers into the business to either buy dormant licences or merge with an existing operator.

According to Bloomberg, the stock exchange said in an emailed response that, “Interested parties have been advised to purchase existing licenses [because] the exchange stopped issuing licenses as it progresses with its intention to demutualise.”

Members of the NSE will have a court-ordered meeting in Lagos on March 3, 2020 to pass some resolutions on the demutualisation, which will convert the exchange from a member-owned mutual organisation into a public limited-liability company.

The exchange, which has 252 dealing members as well as 166 listed equities and 154 bonds, will change its name to Nigerian Exchange Group Plc and then list its shares on its own market as part of the process, known as demutualisation.

In January 2018, former Speaker of the House of Representatives, Mr Yakubu Dogara, had explained that the green chamber of the National Assembly passed the bill demutualising the exchange mainly because of the interest of investors, the nation’s economy as well as the stock market.

According to Mr Dogara, the change of the ownership structure of the NSE would bring the ordinary Nigerian closer to benefiting from the nation’s commonwealth because more multinational corporations will get their companies listed, thereby contributing to the development of the country’s economy.

He had also said the new arrangement would bring a flexible governance structure in the capital market, making it easy for decision to be made in response to changes in the business environment.

The change in the market structure would also afford investors increased access to resources for capital investment by way of equity offerings or private investment to raise funds, Mr Dogara had also stated.