Obligation to comply with financial and accounting
5.01 Every member shall at all times strictly comply with and adhere to the
Act, regulations made under the Act and these rules with regard to financial and
Increase in net capital and liquidity margin
5.02 Notwithstanding any minimum net capital requirement prescribed by the
Council, the Board may increase the minimum net capital and liquidity margin
requirements in respect of any member to suit the
circumstances of a particular case if the Board deems that the circumstances
Memberís duty to notify inability to
5.03 (1) A member shall notify GASCI and the Council immediately if it
becomes aware of any inability by it to comply with the net capital and
liquidity margin requirements.
(2) In addition to giving notice under paragraph (1), the member shall cease
dealing in securities otherwise than for the purpose of giving effect to any
agreement or arrangement entered into before the time when it became so aware.
(3) A member shall be deemed to have been aware of such inability under
paragraph (1) if it would, with the exercise of reasonable diligence, have been
aware of such inability.
5.04 Where the Board becomes aware of any inability by a member to comply
with the net capital or liquidity margin requirements, it may, whether or not
notice has been given under rule 5.03(1) take any action as it thinks fit,
including but not limited to an order for the member to cease trading
immediately. In the event the Board has taken any action against a member or
ordered a member to cease trading the Board will provide an opportunity for the
member to be heard in accordance with the GASCI disciplinary procedures. The
Boardís action or cease trading order shall remain in effect until the hearing
5.05 (1) A member shall keep accounting records which conform to
International Accounting Standards or are deemed to be appropriate by the
Council to show and explain its securities transactions (whether effected on its
own behalf or on behalf of others) and which shall Ė
(a) disclose with reasonable accuracy the financial position of the member at that time;
(b) enable the member to prepare a balance sheet and profit and loss account
as at any time and which comply with the requirements of these rules.
(2) Without prejudice to the generality of paragraph (1), accounting records
shall, in particular, contain -
(a) entries from day to day of all sums of money received and expended by the member, and the matters in respect of which the receipt and expenditure takes place;
(b) a record of all assets and liabilities of the member including any commitments or contingent liabilities;
(c) entries from day to day of all purchases and sales of securities made by the member distinguishing those which are made by the member on his own account and those which are made by the member on behalf of others;
(d) entries from day to day of the receipt and dispatch of documents of title, or documents evidencing title, to securities which are in the possession or control of the member.
(e) entries from day to day of -
(i) all money which is paid into or out of a customer bank account maintained for the purpose of rule 5.10
(ii) receipts and payments of customer money not passed through a customer bank account, identifying the persons to or from whom such receipts and payments are made;
(f) a record of -
(i) aggregate balances on customer bank accounts;
(ii) individual customerís balances stating the name of each customer and the amount held or received for that customer;
(g) sufficient information to explain the member dealings with each customer bank account;
(h) details of all securities -
(i) which are the property of the member; and
(ii) which are not the property of the member but for which the member is accountable showing for whom they are held;
(i) any other particulars from time to time required by GASCI or the Council
to be reflected in the accounts or records of the member.
5.06 (1) The obligations of members under these rules are continuing
obligations and continuous performance of them is required to ensure that
accounts and records are updated daily.
(2) If such accounts and records are not kept sufficiently up to date, as
required by these rules, GASCI may require the member at his own expense to
appoint a professional accountant, approved by GASCI, immediately to take such
action as is necessary to bring the accounts and records sufficiently up to
5.07 (1) Information required by these rules to be recorded shall be recorded
in such a way as to enable a particular transaction to be identified at any time
and traced through from initiation of the order to final settlement.
(2) All records shall be filed, indexed and cross referenced so as to permit
prompt access to any particular record.
(3) A member shall request proof of a customerís identity before dealing on
their behalf and shall record details of the identification used eg National ID
card number or passport number.
5.08 A member shall retain all books of account and other records required to
be kept under these rules for a period of not less than 7 years from the date on
which they are made, together with every contract note received by the member
and a copy of every contract note issued by the member.
5.09 (1) For the purpose of these rules customer money is money of any
currency which, in the course of carrying on securities business, a member holds
or receives on behalf of a customer or which it owes to a customer.
(2) Customer money shall be held by the member on trust for and on
behalf of the respective customers for whom that customer money is received or held according to their respective shares in it.
(3) Customer money shall not form part of the assets of the member for any
purpose and, except as legally allowed, shall not be available in any
circumstances for payment of any debt of the member.
5.10 (1) A member who receives or holds customer money shall open one or more
customer bank accounts with a bank licensed under the Financial Institution Act
1995 and which is approved by the Council for the purpose of these rules.
(2) A customer bank account shall be kept segregated from any account holding
money belonging to the member.
(3) A member shall forthwith pay into a customer bank account all customer
money coming into its hands for or on behalf of a customer.
(4) A member shall keep records of -
(a) all amounts paid into a customer bank account kept by the member, specifying the persons on whose behalf the amounts are held and the dates on which they were paid into the account;
(b) all withdrawals from the customer bank account, the dates of those withdrawals, and the names of the persons on whose behalf the withdrawals are made; and
(c) such other particulars (if any) as may be prescribed by the Board.
5.11 A member shall keep separate accounts for every customer in respect of
its business of dealing in securities.
5.12 (1) A member shall prepare for each of its financial years annual
financial statements which shall consist of-
(a) a balance sheet as at the last day of the financial year; and
(b) a profit and loss account for the financial year.
(2) The balance sheet shall give a true and fair view of the state of affairs
of the member as at the end of the financial year.
(3) The profit and loss account shall give a true and fair view of the profit
or loss of the member for the financial year.
(4) A member shall submit its externally and independently audited annual
financial statements to GASCI within 4 months after the end of the financial
year to which they relate together with its auditors report.
(5) The accounts submitted in accordance with subsection (4) shall be signed
by a director with a statement from the director as to the propriety, disclosure
and accuracy of the statements.
5.13 Every member shall make all books of account and other records required to be kept under the Act available to GASCI and the Council for inspection, or audit by any auditor appointed by GASCI or the Council, when required by GASCI or Council to do so.
5.14 (1) Every member shall within 30 calendar days of the end of each
quarter of its financial year, unless such time period is extended in writing by
GASCI, submit to GASCI a Quarterly Reporting Statement in the form prescribed by
GASCI: provided that if requested by the Board, a member shall submit a
Quarterly Reporting Statement to GASCI within such shorter period as the Board
may stipulate (not being less than 14 days) after the end of the quarter.
(2) When submitting the Quarterly Reporting Statement under paragraph (1) the
member shall also provide a declaration, signed by a director, in the form
prescribed by GASCI, stating, inter alia, that it has at all times during the
relevant period complied with the financial requirements referred to in rules
5.01 and 5.02, together with a signed declaration in the prescribed form by the
accounting or other officer responsible for the preparation of the Quarterly
(3) The Quarterly Reporting Statement shall be signed by the principal of the
member with a statement from the principal as to the propriety, disclosure and
accuracy of the Quarterly Reporting Statement.
5.15 A member shall, in respect of the financial year beginning before and
ending after the day on which the member commences its business of dealing in
securities, and in respect of each subsequent financial year, submit an audited
profit and loss account and a balance sheet made up to the last day of the
financial year to the Board not later than 3 months after the end of the
financial year together with a signed auditorís report thereon which report
shall comply with the requirements of regulation 18 of Regulation No. 6 of 2002
of the Securities Industry Act (Accounting and Financial Statements) Regulations
5.16 Every member shall within 14 days, or such other period as GASCI may
specify, of the receipt of a written demand from GASCI, submit to it such
statements, books, records, accounts and other documents as GASCI may demand.
GASCI may at the request of the Council make such documents available to the
Council for inspection. Where GASCI exercises this discretion, the authority is
deemed to have been given by the member concerned.
5.17 (1) Officers or employees of GASCI or persons appointed by GASCI may
from time to time inspect the books maintained by the member relating to its
business and financial position. Every member shall provide or allow such
officers or employees or appointed persons access to its premises, accounts,
books, documents, papers and records necessary for the discharging of its duty,
with or without prior notice.
(2) Any expenses incidental to or consequential upon an inspection ordered
under paragraph (1) by GASCI shall be borne by the member concerned, unless
GASCI otherwise determines.
(3) A member shall not be entitled to claim against GASCI, officers or
employees of GASCI or any appointed person for any loss or damages whatsoever
relating to an inspection ordered under this rule.
5.18 (1) Any person appointed under rule 5.17 shall be deemed to have been
authorised by the member concerned to obtain direct from such memberís auditor
reporting on the accounts any information or explanation which it may consider
necessary for the purpose of carrying out his duties.
(2) In any case where the information obtained under paragraph (1) or any
other matter arising out of his enquiries leads the person appointed under rule
5.17 to consider that further information should be obtained by GASCI regarding
the memberís state of affairs, it shall be deemed to be authorised to report
accordingly to GASCI.
(3) All accounts and other information obtained by the person appointed under rule 5.17 shall be retained by GASCI and shall be regarded as confidential, and disclosure of information contained or derived there from shall not be made to any body or persons except that GASCI may at the request of the Council furnish a copy of its report to the Council and the authority for doing so is deemed to have been given by the member concerned. The member shall have the right to obtain a copy of such report.