The Nigerian Stock Exchange (NSE) has issued a seven-point guideline on the operations of online stock trading by individual investors.
In a circular dated June 1, 2015, the NSE noted that the launch of its new trading engine, otherwise known as X-Gen, in 2013 has resulted in the creation of online trading portals by stockbrokers. This provided the investing public with the opportunity to place orders for securities listed on the Exchange via the Order Management Systems (OMS) of dealing members from any location in real time.
The Exchange stated that dealing members that operate online trading portals must adhere to a seven-point guideline and all other extant laws and rules and regulations guiding the operations of the stock market.
According to the guidelines, dealing members that intend to set up online trading portals shall implement and set up X-Net connectivity and an Order Management System (OMS) that is certified by the Exchange.
Also, no dealing member shall operate an online trading portal without subjecting the online portal to regular penetration tests, which shall be no less than twice a year with a reputable firm. The dealing member shall submit to the Exchange the certified Penetration Testing Reports from a credible Information Security company that the online portal platform is secured for usage.
The Exchange said it would also carry out independent routine spot checks to validate the Penetration Testing Reports on an annual basis and the dealers must be able to rectify any identified issues promptly.
“All trading activities on the portal must be duly monitored and supervised by an Authorised Clerk employed by the dealing member. Any trading errors or anomalies shall be duly and promptly reported to the Exchange in line with the Exchange’s Error Trade rules,” the guideline stated.
Besides, any dealing member that intends to operate an online trading portal is required to carry out a comprehensive “Know Your Client” (KYC) requirement on all clients registered through the online trading portal before an online trading account is activated, or any transaction is carried out by investors on the portal. The dealing member will also have to keep the records of the (KYC) and transactions for a minimum period of six years, or as may be amended from time to time.
Stockbrokers are also expected to disclose on its trading portal and account opening forms the risks associated with using the portal in addition to compliance with the Exchange’s rules and regulations including those on communications, advertisement and publication.
According to the circular, applications used by clients to access the OMS system shall be protected with strong passwords, strong authentication in line with industry standards, optimised for performance and regular security testing.
The Exchange indicated that it may review the operations, guidelines and rules and regulations relating to the online stock trading as the new trading mechanism evolves.
Investment One Stockbrokers International Limited recently launched a high-end trading portal, which offers on-line, real time trading on the NSE to savvy investors.
The on-line portal known as ‘Easy Trade’ allows investors to buy and sell stocks directly on the NSE in addition to access to real time market data and back-up research and analyses. The sign-on fee is a one-off payment of N1, 000 while investors can open account and trade with any amount. Investment One Stockbrokers International Limited is a fully owned subsidiary of Investment One Financial Services Limited.
By Dike Onwuamaeze
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