Emerging challenge triggers NSE’s minors custodian account updating
Sets December 18 deadline for submission of inputs
The Nigerian Stock Exchange (NSE) has intensified effort in bettering rules for minors’ custodian accounts in the bourse.
This is aimed at ensuring that people of different age brackets are not left out of its wealth creation prowess and financial empowerment.
This was however, further driven by emerging challenges in the existing rules, which has reinforced the need to block all existing lacuna, in the prevailing rules on custodian accounts for minors.
Towards achieving a robust legal framework, the Exchange recently called for inputs into new regulation concerning opening, operation, and closure of brokerage accounts for adolescents or investors under the age of 18.
The Exchange said that the guidelines are 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.”
General Counsel and Head of Regulation at the NSE, Tinuade Awe, in a signed notice on the need for enhancing such regulatory requirement by the NSE, said that such judicial requirement 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
Stories by Bonny Amadi
