“My people are destroyed for lack of knowledge: because you have rejected knowledge, I will also reject you, that you shall be no priest to me: seeing you have forgotten the law of your God, I will also forget your children” – Hosea 4:6.
Nathan, an equity investor, has sworn never to invest in the stock market again. I was surprised and wondered why? Nathan went on to say his initial experience has been nothing but awful. He explained how he invested the sum of N200,000.00 over three (3) years ago in the stock market via his broker. He complained that he had absolutely no idea what stocks were purchased on his behalf talk less of the units purchased. Neither has he received any dividend for the stocks he mandated his broker to purchase.
He had informed his stockbroker who did nothing about it. He is tired of following up with the stockbroker and has left him in the hands of God.
This write up became necessary as I realised so many people know little or nothing regarding the role or responsibility of their stockbrokers and their responsibility and rights as the investor.
Who is a stockbroker? A stockbroker is a professional who buys and sells securities e.g. stocks. They can also advise on the stocks to buy as well as when to buy and to sell. They are to advise on the stocks that are most suitable for you based on your goal or risk appetite.
They must stay up-to-date on market research and financial news to provide their client with the best return.
In Nigeria, when you meet with the broker, you would be asked several questions to enable him advise on the sector/s to invest in the stock market, if you are in for the long term hull or short term (Trading with the aim of taking profit in the earliest possible time) etc.
Forms will be given to the investor for Know Your Customer (KYC), Account opening forms are to be completed. You will require means of identification, utility bill, passport photograph to complete these forms.
Below are some responsibilities and recommendations to help.
Always invest with a reputable stockbroking firm
Be sure that the stockbroking firm’s capital base meets and even exceeds the minimum required share capital as mandated by Securities and Exchange Commission (SEC).
I recall I had purchased stocks via a broking firm, XYZ. Unfortunately, they were unable to meet the required capital base or even consolidate with other firm/s before the deadline stated by SEC. As a result, XYZ was barred and I was unable to carry out any transaction on my portfolio through XYZ. I had to go through the rigorous exercise of transferring my stock portfolio to another broker to enable me sell my holdings previously purchased via XYZ.
Always request to receive your contract notes for any buy or sell mandate
You should always request for your contract notes whenever a buy or sell mandate is executed by the broker.
The contract notes shows the date of purchase/sale, stocks and unit purchased/sold, unit price at which it was purchased/sold as well as the SEC charges. The broker is mandated to forward the contract notes.
SMS alerts have been automated for most stockbrokers who have upgraded their platforms in line with NSE guidelines.
This means if your phone and email records are up-to-date with the broker, you will receive alert for transactions done on your account. The onus is for us to confirm that our stockbrokers have upgraded their platforms.
Register for e-dividend mandate
It is always advisable to register for e-dividend mandate with your broker. With this, the investors account is credited immediately once the payment of dividend commences by a company that has declared dividend.
Request for CSCS statement quarterly or as you deem fit
As an investor, you can at any time, request for your CSCS statement – which shows your holding in any stock lodged with the CSCS.
CSCS has become innovative, as you can register to receive alert for any transaction carried out on your account. You can even register online to view your account.
Have an Excel sheet to monitor the performance of your portfolio
It is always advisable to have an Excel table detailing your stock portfolio, with information such as the date of purchase, actual cost as well as actual current price. This will enable you track actual profit or loss on your portfolio.
Keep yourself abreast with market update
It is important to keep yourself abreast with market update such as declaration of interim and final dividend. Dividend declared can also be updated on the table to help keep track of your dividend. With this, you can follow up with the registrar or your broker for non-receipt of declared dividend.
Where there is a case of non-receipt dividend warrant, this may mean the Registrar does not have your records or unable to accurately verify your records in their books. Hence, you may need to visit the Registrar or mandate the broker to visit on your behalf with the following:
• Bankers verification of signature—a letter from the investor’s bankers with your recent passport photograph and a portion on the letter for the investor’s signature. This letter confirms the investor’s signature and authenticity of the investor.
This letter is submitted to the registrar.
• The registrar would again forward same to the investor’s bank to confirm its authenticity.
• Forms to be completed as obtained from the Registrar.
• Once this process is completed, the registrar would credit the investor’s account for any unclaimed dividend, if any.
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