Desperate brokers dump shares

Stockbrokers are reportedly becoming increasingly desperate with the near stalemate of transaction activities on the floor of the Nigerian Stock Exchange. It is said that increasing state of illiquidity in the market is telling on the lifestyles and operations of most stock brokers and their firms. In desperation many of the brokers are selling off stocks in their portfolio to keep a marginal liquidity position.

Market experts, however, argued that this desperate dumping of stocks by operators would further aggravate the bearish situation in the market because as more shares are dumped on the market the more shares prices head southward.

Brokers divert Honeywell public offer subscribers’ money

This is like sounding the alarm, Fortune&Class Weekly has been informed that some cash strapped stock brokers have had to divert funds paid to them by investors to purchase the recently concluded Honeywell Flour Mills public offer.

Market trend watchers said beside those brokers that deliberately expropriated the funds to their own use because of the paucity of funds in the market and the near non-existence of transactions in the secondary market, bankers to brokers are impounding, more or less, all money lodged in the accounts of brokers.

“You know that the bank accounts of some brokers are at the moment committed to huge default margin from the banks which the banks on the other hand are desirous of recovering. So, what is happening now is that the public offers like the one conducted by Honeywell provides opportunity for liquidity. What I have heard is that once a debtor-broker pays an investor’s cheque into a bank account, the bank almost certainly confiscates the fund at the matured date of the cheque to offset their exposure to the broker.

THE STOCK EXCHANGE SYSTEM FAILURE THAT NEARLY COST AN INVESTOR’S 20 MILLION UNITS OF FIRST BANK STOCK

Trading activities on the floor of the Nigerian Stock Exchange on Thursday 6 November, 2008 were nearly marred by constant glitches in the Exchange’s network, but for vigilance, an unnamed investor would have lost 20 million units of his First Bank shares.

Indications of the discomforting disruptions that would characterize trading activities on the day emerged at about 10.59am when the Exchange’s management posted a notice on the work stations of brokers warning them of a failure in connection to the Central Securities Clearing System. The dealing clerks were warned not to use the opportunity to sell what they do not have or enter a wrong account number. “We would not cancel trades or change account numbers for you. Look before you leap. Thank you.” The message warned.

It turned out that the Exchange had no choice but to cancel trades after all. At about 1.18 pm, the Exchange’s, management posted another notice on the work station: “Camry sold First Bank shares without mandate, hence the Exchange called for a cancellation of the deal.