The Nigerian Exchange Group (NGX Group), through its regulatory arm, NGX Regulation Limited (NGX Regco), imposed 3,792 regulatory actions on erring trading license holders over 13 years, according to BusinessDay.
This period, spanning from 2011 to 2023, included 193 rule breaches by stockbroking firms, as detailed in BrokerTraX, a compliance report for trading license holders.
To bolster investor confidence, NGX launched the BrokerTraX initiative, aiming to combat market infractions among its trading license holders.
The report reveals that in 2011, NGX Regco enforced 257 actions against stockbroking firms. This number rose to 436 in 2012 but dipped slightly to 424 in 2013.
Subsequent years recorded varying figures: 557 actions in 2014, peaking at 608 in 2015 before dropping to 328 in 2016. Enforcement actions were 267 in 2017, 171 in 2018, 167 in 2019, 82 in 2020, 148 in 2021, 139 in 2022, and 208 in 2023, bringing the total to 3,792 sanctions.
“The reduction in the number of enforcement actions carried out in 2020 was due to the regulatory concessions granted to trading license holder firms to cushion the adverse effects of COVID-19 on their business operations,” the NGX explained.
Between January 2012 and November 25, 2024, no fewer than 37 stockbroking firms (names withheld) were implicated in unauthorised sales of investors’ shares and misappropriation of investors’ funds.
The report notes that many complaints regarding unauthorised sales and misappropriations have been resolved, are under resolution, or have been addressed through the Investors’ Protection Fund (IPF).
“With the BrokerTraX, investors can now make more informed decisions about where to invest by viewing names of trading license holder firms that have been found liable for contravening market rules,” the report stated.
“The goal is to reduce contraventions of market rules to their barest minimum, in line with the deliberate and sustained effort to restore confidence. With NGX’s zero-tolerance policy on regulatory infractions, there has been an increase in compliance by trading license holders.”
Since 2012, at least 64 dealing clerks and other approved individuals (names withheld), including staff of trading license holders, have been blacklisted. Notably, in June 2024, six individuals faced blacklisting.
One individual was blacklisted for involvement in unauthorised transfer and sale of clients’ shares and referred to their professional body for further action. Another individual faced similar consequences, with their case referred to respective professional bodies, such as the Chartered Institute of Stockbrokers, for disciplinary measures.
“Blacklisting means a situation where The Exchange puts the name of a trading license holder on a list of persons who are denied privileges, services, access, recognition or are boycotted or punished,” the NGX stated.
Additionally, within the review period, 15 firms and 40 individuals (names also withheld) accused of misconduct were referred to the Economic and Financial Crimes Commission (EFCC). Some cases are in court, while others remain under investigation. In some instances, clients’ funds have been restored, and cases closed.
The allegations against these firms and individuals include unauthorised sales of client shares, misappropriation of investors’ portfolios, diversion of funds, and involvement in unregistered guaranteed investment schemes.
Between January 2013 and January 2018, NGX’s disciplinary committee sanctioned 11 trading license holders and 17 brokers for various market infractions, ranging from share price manipulation to unauthorised sales of client shares.
BrokerTraX also highlights stockbrokers’ compliance rates regarding regulatory returns. Compliance stood at 55% in 2011, 75% in 2012, and 94% in 2013. Subsequent years recorded compliance rates of 76% in 2014, 96% in 2015, 76% in 2016, 79% in 2017, 85% in 2018, 86% in 2019, 85% in 2020, 89% in 2021, and 90% in 2022.
