Stockbrokers Demand Formal Role In FRC’s Financial Asset Valuation Framework

The Association of Securities Dealing Houses of Nigeria (ASHON) and the Chartered Institute of Stockbrokers (CIS) have called on the Financial Reporting Council of Nigeria (FRC) to formally involve capital market professionals in the review of valuation guidelines for financial assets.

In a joint position paper signed by chairman of ASHON, Sehinde Adenagbe, and president and chairman of council of CIS, Dr. Fiona Ahimie and submitted to the FRC on the Exposure Draft of the Valuation Regulations for Financial Reporting, 2024, the two bodies said valuing capital market instruments requires specialised expertise that goes beyond accounting measurement and financial reporting.

They argued that stockbrokers and securities dealing firms possess critical market knowledge in areas such as market microstructure, price discovery, liquidity, yield curves, risk pricing, and trading behaviour.

This expertise, they said, should inform any regulatory framework governing financial asset valuation.

“Just as property valuation standards are informed by qualified estate surveyors and valuers, valuation standards for financial assets should equally be informed by professionals whose principal practice is the valuation, analysis, trading and management of those assets,” the paper stated.

ASHON, which represents SEC-licensed securities dealing firms, said its members participate daily in the origination, trading, pricing and distribution of financial instruments in the Nigerian capital market.

CIS, the statutory body for stockbrokers, added that its training, examinations and professional standards cover investment analysis, securities valuation and portfolio management.

The organisations specifically urged the FRC to give ASHON and CIS formal representation on technical working groups, review committees and advisory panels set up to develop valuation guidance for financial instruments.

They noted that broader stakeholder participation would strengthen confidence in financial asset valuations reported in financial statements and improve consistency between accounting requirements and actual market practice.

While describing the FRC’s initiative as timely and commendable, ASHON and CIS cautioned that the effectiveness of the final framework would depend on the quality of expertise brought into the process.

They called for a multidisciplinary approach that combines accounting rigour with practical market experience.