Individual
and institutional investors will henceforth have to submit for biometric
identification before they could buy or sell shares at the Nigerian stock
market, according to new rules being proposed by the Nigerian Stock Exchange
(NSE).
A draft
copy of amendments to rules governing operations and operators at the stock
market obtained at the weekend by The Nation showed that all stockbrokers will
now be required to obtain the biometrics of all their clients in a new rule
being proposed by the NSE.
In what
may have far-reaching implication at the market, NSE indicated biometric
identifiers to be obtained “shall include finger prints and iris recognition
and the information collected shall be applied towards confirming clients’
identities”.
While
individual investors will have to provide biometrics on every account,
corporate entities will provide corporate information as well as biometrics of
the authorized signatories to their share trading accounts.
“No
Dealing Member shall open, accept and/or operate a share trading account or
otherwise deal in any manner whatsoever, on behalf of any person or entity
unless the biometrics of such person or authorized signatories of the entity
have been collected by the firm,” the new rules stated.
According
to the proposed rules, any stockbroker that fails to obtain the biometrics of
its clients and obtain adequate know-your-client documentation from its clients
shall be suspended from trading forthwith until regularization is effected.
Besides,
an investor will have to provide a minimum of three identifications to meet the
new score-based criteria for opening of account, under one of the new rules.
NSE is
proposing a clients points system under which stockbrokers will have to ensure
that an investor score a minimum of 10 points to be eligible to hold an
account.
In
obtaining the data of its clients for identification purposes, every dealing
member is expected to apply the “Clients Points System”, with the points
awarded according to predetermined grade of the Exchange.
According
to the rules, international passport caries the highest grade of five points,
national identity card carries four points, driver’s license obtains two
points, utility bill accrues two points, voters card entitles to a point while
employee’s photo identification card issued by recognized employer with
employer’s tax identification from the Federal Inland Revenue Service obtains
two points.
Stockbrokers
are also expected to obtain their clients’ investment objectives and they must
identify the categories of investors under foreign, local retail or
institutional investor.
In
addition to compliance with extant rules and laws on money laundering,
stockbroking firms are also expected to have an anti-money laundering policy
and train their employees on the prevention and detection of money laundering
and other related activities as may be prescribed by the Exchange from time to
time.
Besides,
brokers are expected to disclose to the NSE on a quarterly basis and in a
prescribed format all proprietary accounts held by it whether directly or
indirectly and with other stockbroking firms
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