The proposal for an increment in the minimum stated capital of security market operators by the Securities and Exchange Commission (SEC) is long overdue, given the growth in the sector and changing market dynamics, Bernard Osei-Tutu, Chief Executive Officer of Dusk Capital, has said.

“The new capital requirement is long overdue. This should have been done a long time ago, but it’s never too late,” he told the B&FT.

The Director General of the SEC, Daniel Ogbarmey Tetteh, last month hinted at plans to increase the minimum capital for operators to strengthen the sector and protect investors.

The plan, he noted, “is to do some engagements with the market, because we believe that we want to get their buy-in. But we will keep the overriding objective in view, which is to make sure that at the end of the day we have very strong market operators”.

Though the SEC is yet to set the new capital, an increase from GH¢100,000 to GH¢5million has been mooted by some analysts.

While welcoming the decision by the SEC to adjust upward the minimum capital, Mr. Osei-Tutu cautioned that the proposed increment must not be astronomical and should be staggered over a five-year period.

“The rumour and figures we are hearing is that it will be increased from GH¢100,000 to GH¢5million. The jump is really unrealistic and very astronomical in terms of percentage. If currently the stated capital is GH¢100,000 and you are seeking to increase it to one, two or GH¢5million, it is a huge jump,” he said.

“But we in the industry also acknowledge the fact that there must be sanity in the industry. We are of the thought that for you to be in the industry, you have to be well-capitalised. But we think it must be done, and done well, so we don’t let people just get out of the market because the kind of service we provide doesn’t really require large capital,” he added.

The moves to strengthen the securities market follows a similar initiative by the central bank to strengthen the banking sector.

In September, the Bank of Ghana (BoG) introduced the Internal Capital Adequacy Assessment Process (ICAAP) under the Basel II framework. The ICAAP will require banks to more than treble their minimum capital to GH¢400m (US$91.6m) by December 31, 2018.

This represents a much bigger jump than previous increases imposed by the regulator over the past decade to strengthen the balance sheets of Ghana’s banks.