Manage your investments with more confidence.
Open a trading account today and kickstart your investments.Get Started
The Securities and Exchange Commission (SEC) has launched a bid to simplify stock market’s account opening process and requirements for low-income and financially- excluded segment of the population.
This is part of efforts to widen the domestic investors’base.
Less than three per cent of the population invests in the stock market, a situation that narrows the national capital formation process and subjects the market to extreme fluctuations of foreign portfolio investors.
In a circular at the weekend, obtained by The Nation, SEC plans to introduce a new three-tiered account opening and requirements that allow financially excluded and low-income persons to start investing in the stock market. This will be done with simple identifications and with no specified minimum investment deposit.
With these, any Nigerian that can provide basic information such as name, passport-sized photograph, place of birth, nationality, gender, home location and address and telephone number; directly or through an agent, will be able to open a stock market investment account with as little as the person can afford. There is no further provision of documentary evidence for verification.
The proposed framework is, however, still subject to further scrutiny of stakeholders and approval by the board of SEC.
Under the three tiered know-your-customer (KYC) requirements being introduced under the new framework, potential investors are categorised under the three headings of low-risk account, medium-risk account and high-risk account. Capital market operators are required to move accounts to the next level once they exceed the stated maximum cumulative balance for each level.
For the low-risk account, no minimum investment amount is required for opening the account, which may be opened through an agent, at the stockbroker’s office or linked to a mobile phone. Under this category, investments can be made by account holder and third parties while redemption payments are restricted to account holder.
This account applies only to Nigerian citizens or residents and there shall be no transfer of funds to other accounts and no foreign remittance can be credited to the account. A low-risk account is limited to only one account per person for each capital market operator and it shall be limited to a maximum single deposit amount of N20,000 and maximum cumulative balance of N200,000 at any point in time. It shall also be limited to a maximum daily redemption limit of N30, 000.
Source: The Nation