No biometrics, no share transaction, says Stock Exchange


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



The nation
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