Stockbrokers And Recapitalisation

[c kenneths]

I learnt that stockbroking firms are now required to recapitalise to the tune of 1 billion naira. What is the full implication of this on the stockbroking firms,

1. Will it force the brokers that cannot come up with the amount to close shop?

2.Will they go for public offers like banks and insurance firms did?

3. Are they to own a seperate 1 billion or is it supposed to be made up of peoples stockholdings at their deposit?

4. Will there be mergers and acquisitions?

5. If they close shop, what will happen to the people that have stocks bought through them?

Lets try and provide answers to these questions to continue to educate each other.

[paragon]

well,
1. those that do not meet the requirement will close shop.

2. No they will not go public. They will most likely source funds in terms of debt or private equity investment.

3.They are to own separate N1 billion.

4. yes there will be mergers

[Miss_Risky]

5. My guess is there would be a procedure for closing shop. Such a process would include notifying all clients first of all of their intention to close shop and to complete the necessary forms in order to transfer their shares to a new stockbroking firm.

That's what I would expect to happen but what would actually happen...
Moreover, even if the stock transfer does not take place, I would imagine that irrespective of the brokerage firm, you're still the shareholder and have the share certificate to prove it!

[c kenneths]

Share certificates? you dont get any share certificate if you bought from a stockbroking firm, secondary market not public offers.

Can we please make enquiries and post our findings.

[Avocado]

Originally Posted by c kenneths

Share certificates? you dont get any share certificate if you bought from a stockbroking firm, secondary market not public offers.

-- this is unclear, could you clarify?
(1) When shares are bought in the secondary market, there're no share certificates issued?
(2) Is it correct then that the shares are only recorded in the NCSC system?
(3) What'll be the proof of ownership of any shares bought on the secondary market?
.

[Avocado]

Perhaps, a list to be updated of Stockbroking companies and their paid-up capital could be made...

.

[c kenneths]

Originally Posted by Avocado

-- this is unclear, could you clarify?
(1) When shares are bought in the secondary market, there're no share certificates issued?
(2) Is it correct then that the shares are only recorded in the NCSC system?
(3) What'll be the proof of ownership of any shares bought on the secondary market?
.

@avocado, when you buy shares in the secondary market, from a stockbroker you will get no share certificate. This is because you are buying shares that had been owned by someone else.

It is lodged in a place called cscs, they always posses a complete list of all shares and who owns them and of what quantity daily. So when you buy a stock from a broker, they register your name and delist the name of the person that sold to you, this is called stock transfer, then the money you paid will be transfered to the person selling through his broker.

The proof of ownership of such stocks are just contract notes stating the shares bought for you at what price and what qty. and all other charges.

Independently, you can also verify periodically what your stock balance is at cscs.

You can then sell it and buy another stock if your in this business for only capital gains.

[Avocado]

c kenneths:

I must then request my stockbroker for the Contact Note for each transaction then. Not that they're not doing their job well, as it's somewhat easy to obtain an CSCS update. I didn't know that the Contract Notes were, er, legal documents.

.

[c kenneths]

Its very important, infact I have one big file in my study where I file only contract notes, its a physical evidence of purchase.

[c kenneths]

I noticed that stockbrokers are now targeting bigger deals a means of increasing their returns and meeting up the cap. deadline.

They have now resorted to increasing the amount they collect as first deposit for buying shares before they will agree to open a stockbroking account for you.

I sent two guys to open accounts yesterday with a stockbroker, and they came back telling me that the first broker who colleted 10000 to open last week is now demanding 100,000 and Fidelity union has climbed from 50000 to 500,000

I see this trend may start to get negative untill some low networth individuals will be technically disqualified from investing in our stock market.

[toyibanj]

I'm presently with a small obscure broker. I'm thinking of moving my business to a big one with a strong analytical team. I have min. amount stipulated by some big ones, 5 mil i think. Any recommendations. IBTC, Zenith, cashcraft, intercontinental e.t.c. Also i'm based overseas, so they must have real time online presence for execution of my instructions.
thanks for your input.

Toyibanj

[kaymoney]

This is not a good omen for young investors who are just entering into the market.Although it has always been like this, i mean having some stockbroking firm demanding that you open an account with large some of money whereas others with an affordable sum of money.Whatever may be the case one will always get the one that will suit ones purpose.Guys you can recommend some of your stockbrokers for entry level guys.

[RemzyJ]

Imagine my surprise when Zenith demanded N5m.

The trend is that the stockbrokers that will/already met the capital requirements are out of reach for smaller investors hoping to moving from the less capitalised brokers.

[dotunk]

Avocado,

if your broker refuses to give you a contract note for EACH transaction, stop using him... and thats the naked truth.

[arizona]

@dotunk,
what i use to get from my broker is receipt of my payment and a printed copy of a particular stock with price and quantity. is that the contract note you are talking about? enlight me more on the contract note, i need to put things in order since i will be in the country very soon.

[c kenneths]

Acontract note is a simple sheet of paper with your brokers company name and logo printed on the top corner, not neccesaily, colored but the important thing is for the stock bought and the date of purchase to be written, then the price at which it was bought. Also important is the qty bought, the amount you paid, the various charges, NSE charges, SEC charges, VAT, TAX, brokers comission, and the total charges, the balance used to buy the shares, and grand total, which is an amount very nearly the one you paid.
Thats all about contract notes. It could be either signed or unsigned by an official of the broking firm. Its only an evidence of purchase. BYE.

[dotunk]

arizona/

c kenneths is right. that is the long and short of "contract notes".

well i think we will have to do with the brokers that can collect our kobos until we can afford the ones that want millions.