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SEC Moves to Open up Stock Market to Small-Scale Investors



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  • SEC Moves to Open up Stock Market to Small-Scale Investors

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, 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.

To open a low-risk account, a prospective investor only need to provide basic customer information such as name, passport-sized photograph, place of birth, nationality, gender, home location and address and telephone number and all these may be sent electronically or submitted onsite to the capital market operator, its branches or agent’s office. There shall be no further request for documentary evidence of identity.

The medium-risk account builds on the requirements for low-risk account by requesting for verification of the basic customer identification information. The medium-risk account may be operated by phone or through the capital market operator’s customer web site and portal.

The medium-risk account is limited to a maximum single deposit of N40, 000, a maximum cumulative balance of N400, 000 at any point in time and a maximum daily redemption limit of N50, 000.

In addition to these, a medium-risk account holder will be required to provide suitable referees, which may include village heads, trade groups, supervisors and employers among others.

“Where verification of client’s identification documents is not complete the client shall not be allowed to operate the account,” according to the proposed framework.

Under the high-risk account classification, capital market operators are required to obtain, verify and maintain copies of all the required documents for opening of accounts. Such accounts can only be opened at the capital market operator’s office or branch of its agent’s office face to face by the prospective customer and a minimum investment amount may be required for the opening of high-risk accounts. There shall be no maximum limit on single deposits and cumulative balance.

The high-risk customers are required to comply with the KYC requirements contained in SEC’s Anti-Money Laundering and Combating the Financing of Terrorism Regulations, 2013. Besides, high-risk customer identification information and documents are to be verified against similar information contained in relevant data bases.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.


Communities in Delta State Shut OML30 Operates by Heritage Energy Operational Services Ltd




The OML30 operated by Heritage Energy Operational Services Limited in Delta State has been shut down by the host communities for failing to meet its obligations to the 112 host communities.

The host communities, led by its Management Committee/President Generals, had accused the company of gross indifference and failure in its obligations to the host communities despite several meetings and calls to ensure a peaceful resolution.

The station with a production capacity of 80,000 barrels per day and eight flow stations operates within the Ughelli area of Delta State.

The host communities specifically accused HEOSL of failure to pay the GMOU fund for the last two years despite mediation by the Delta State Government on May 18, 2020.

Also, the host communities accused HEOSL of ‘total stoppage of scholarship award and payment to host communities since 2016’.

The Chairman, Dr Harrison Oboghor and Secretary, Mr Ibuje Joseph that led the OML30 host communities explained to journalists on Monday that the host communities had resolved not to backpedal until all their demands were met.

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Crude Oil Recovers from 4 Percent Decline as Joe Biden Wins



Oil Prices Recover from 4 Percent Decline as Joe Biden Wins

Crude oil prices rose with other financial markets on Monday following a 4 percent decline on Friday.

This was after Joe Biden, the former Vice-President and now the President-elect won the race to the White House.

Global benchmark oil, Brent crude oil, gained $1.06 or 2.7 percent to $40.51 per barrel on Monday while the U.S West Texas Intermediate crude oil gained $1.07 or 2.9 percent to $38.21 per barrel.

On Friday, Brent crude oil declined by 4 percent as global uncertainty surged amid unclear US election and a series of negative comments from President Trump. However, on Saturday when it became clear that Joe Biden has won, global financial markets rebounded in anticipation of additional stimulus given Biden’s position on economic growth and recovery.

Trading this morning has a risk-on flavor, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”

The president-elect and his team are now working on mitigating the risk of COVID-19, grow the world’s largest economy by protecting small businesses and the middle class that is the backbone of the American economy.

There will be some repercussions further down the road,” said OCBC’s economist Howie Lee, raising the possibility of lockdowns in the United States under Biden.

“Either you’re crimping energy demand or consumption behavior.”

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Nigeria, Other OPEC Members Oil Revenue to Hit 18 Year Low in 2020




Revenue of OPEC Members to Drop to 18 Year Low in 2020

The United States Energy Information Administration (EIA) has predicted that the oil revenue of members of the Organisation of the Petroleum Exporting Countries (OPEC) will decline to 18-year low in 2020.

EIA said their combined oil export revenue will plunge to its lowest level since 2002. It proceeded to put a value to the projection by saying members of the oil cartel would earn around $323 billion in net oil export in 2020.

If realised, this forecast revenue would be the lowest in 18 years. Lower crude oil prices and lower export volumes drive this expected decrease in export revenues,” it said.

The oil expert based its projection on weak global oil demand and low oil prices because of COVID-19.

It said this coupled with production cuts by OPEC members in recent months will impact net revenue of the cartel in 2020.

It said, “OPEC earned an estimated $595bn in net oil export revenues in 2019, less than half of the estimated record high of $1.2tn, which was earned in 2012.

“Continued declines in revenue in 2020 could be detrimental to member countries’ fiscal budgets, which rely heavily on revenues from oil sales to import goods, fund social programmes, and support public services.”

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