Why Fraudulent Trading is Rampant, By NSE Boss
By Uche Obike
The Council President of the Nigerian Stock Exchange (NSE), Dr. Raymond Obieri has blamed investors who patronise unregistered stockbrokers for the increasing wave of discrepancies in equities transactions.
Responding questions, Obieri noted that "we have found out that some people who buy shares do not patronise registered brokers."
He added that "we encourage investors to always deal with licensed dealing stockbrokerage companies because the Nigerian Stock Exchange (NSE) and the Securities and Exchange Commission (SEC) have a way of disciplining any dealing member who contravenes any of the regulations."
Obieri explained that the regulators can also force dealing members to refund any improperly concluded transactions. He assured that the NSE will continue to fine-tune the new strategies as we go further because the fraudsters do not go to sleep as they continue to device other means.
He acknowledged the fact that "when the market is growing, of course, you find perhaps more people that have fraudulent intentions. And, the trade alert is one of the effective thing, the stock exchange has come up with after a thorough research. When the trade alert is finally operational, no shares can be sold without the owner knowing. And, the moment that is effective, you will find out that the game of the fraudsters had busted."
It would be recalled that the Director General of the Exchange, Dr. Ndi Okereke-Onyiuke, recently in a press briefing announced the introduction of the Trade Alert System into the market system. She said that the new product was an investor's protection scheme, while the whole idea of the system was to put all relevant information concerning the investment of shareholders in the palms of their hands due to the fact that some stockbrokers were allegedly selling shares of their clients without mandate.
She added that "being a maiden scheme in the whole world, it is also set to address the perennial issues associated with authorised transactions and the timing of the initiative is instructive given the challenges imposed by the dictates of global commerce, especially as they relate to transparency, corporate governance and organised compliance."
She disclosed that the idea of the new trading alert system was brought by the Chairman of Adonai Net, Mr. Gboyega Olulade when the NSE complained against the act of selling shares by a few brokers without the owner's consent.
In response, she explained further that "Olulade went and spent several amount of money to build a platform for the Trade Alert System."
"It was because I complained about the attitude of a few my stockbrokers to Olulade that made him contact his American friend who brought about this Trading Alert System. He spent a lot of money to build the platform in South Africa. The NSE and CSCS did not spend any money because Olulade used his own money to establish the project. And, with the introduction of this project, we will have no more problems in the market," she said.
She recalled that "the platform of the Trade Alert System was established in South Africa due to infrastructure problems such power (electricity) failure in Nigeria. So it was built there due to its 24 hours of electricity and the Trading Alert System needed constant power in order to function very well."
Okereke-Onyiuke said that "a software had been installed to the rear end of the mainframe of the computer system of the CSCS such that whenever there is a transaction on the account of subscribers at the CSCS, an SMS message is triggered into the Global Mobile Services (GSM) handset of the investor, detailing sales or purchase and specifying volume and price.
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