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Stockbroking firms must comply with modern risk management strategies—ASHON boss

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The Chairman, Association of Stockbroking Houses of Nigeria (ASHON), Chief Patrick Ezeagu, has called for regular training and retraining of practitioners especially on modern strategies in the management of industry risks and challenges to remain in business.

In an interview, he said “Given the realities of our time, it is very important for a stockbroking firm to comply with modern risk management strategy, and this is top on the list. It starts with capital adequacy, having the right organisational structure on ground, having the right management team, bringing on board the requisite experience to run the firm”.

“After which, the firm must meet the minimum operating standard stipulated by the regulatory authorities. With these on ground you cannot get it wrong because the rules are there, the markets are there, the capacities in terms of men and materials that you are going to use are there. And then, over time, you will be able to learn and key into the way and manner the business is administered.

On how best to protect the investments of Nigerians in the market considering the risk levels, Ezeagu averred that “The truth is that when you have knowledgeable people managing the capital market environment that is in itself, a huge protection”.

“It means that the professionals will not lead you astray except those that are fraudulent. The fact is that we have what is called Trade Guaranty Fund.  We also have Investment Protection Fund. The fund in itself is not the issue; it is the integrity of the market participants that is more important”.

“Once the integrity of the market is guaranteed by the fact that people operate within the rules and regulations guiding the market, then you can be sure that the market is well protected. The market is guided by rules and regulations and there is the apex institution that is like the “big brother” watching you. These are the things that ensure that there is integrity and investors can trust the market and participate actively in it.

He said “To complement these, there are avenues for the ventilation of grievances between parties in the market.  This is because in a situation where you have two parties that interact, sometimes there will be conflict. Therefore, we have a very robust conflicts management framework which has been designed and flows from firms to the Securities and Exchange Commission (the Nigerian capital market apex regulator) and even to the Investment and Securities Tribunal.

Continuing, ASHON boss argued that “If people are assured that they can come into the market and exit whenever they like in an orderly manner, they develop confidence and patronise the market. This is a global sentiment that has prevailed over time”.

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