NSE Set to Tackle Fraudulent Stockbrokers
Capital Market
By Uche Obike
The Nigerian Stock Exchange (NSE) has introduced measures to crack down on fraudulent transactions and market abuse by a few stockbrokers.
It signalled the start of this campaign recently when it introduced the trade alert system into the stock market.
In her address to market operators, the Director General of the Exchange, Dr. (Mrs.) Ndi Okereke-Onyiuke, explained that the introduction of the trade alert to the stock market was one of the new strategies by the NSE to tackle market-associated problems especially the selling of shares with the approval of their respective owners.
Okereke-Onyiuke forecast a bleak outlook for any broker caught in any fraudulent transaction at the market-place.
She said that it was ridiculous for a stockbroker to sell the shares of his client without being authorised to do so.
She said the punishment for any stockbroker either caught in the act or in an attempt to do so will be by having the shares attempted to be sold retrieved and in addition made to pay N100 the client. Depending on the level of the act, he will be relieved of his license or suspended."
The NSE, Central Securities Clearing System Limited (CSCS) in conjunction with Adonai Net recently, introduced Trade Alert system to investors and shareholders.
Okereke-Onyiuke said that the trade alert system was an investor protection scheme as the whole idea was to make all relevant information on the investment of shareholders available to them due to the fact that some stockbrokers were into the act of selling the shares of their clients without their mandate.
She also said that being a maiden scheme in the whole world, it was set to address the perennial issues associated with authorised transactions and the timing of the initiative was instructive given the challenges imposed by the dictates of global commerce, especially as they relate to transparency, corporate governance and organised compliance.
According to her, the idea of the new trading system was brought by the Chairman of Adonai Net, Mr. Gboyega Olulade, when she complained to him about the attitude of selling shares without the owner's consent by the stockbrokers. Following this, she said, Olulade spent some amount of money to build a platform for the trade alert system.
"It was because I complained about the attitude of my stockbrokers to Olulade that he contacted his American friend who brought about this trading alert system. He spent some money to build the platform in South-Africa and NSE/CSCS did not spend any amount 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.
Furthermore, she said that the platform of the trade alert system was established in South-Africa due to infrastructural problems and power(Electricity) failure in Nigeria. So it was built there due to its 24 hours of availability of electricity and the Trading Alert system needed constant power in order to function very well.
Explaining how the system works, Okereke-Onyiuke said that "a software has been installed to the rear end of the mainframe of the computer system of the CSCS which, whenever there is a transaction on the account of subscribers at the CSCS, an SMS message is triggered into the Global GSM Systems for Mobile Communications handset of the investor, detailing sales or purchase and specifying volume and price. In the event that the investor did not authorize the transaction, he can summarily abort the process by placing a call to some dedicated lines".
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