Effect of Central Security System on the Nigeria Stock Market

Effect of Central Security System on the Nigeria Stock Market

CHAPTER ONE

OBJECTIVES OF THE STUDY

The research study is undertaken with a view of achieving the following objective. Which are:-

To ascertain the effect of Central Securities System on the Nigerian stockmarket
To assess the effect of Central Securities System on investors’ confidence in the trading activities on the Nigerian stockmarket
To identify the effect that the share certificate dematerialization will have on the performance of trading activities on the Nigerian stockmarket.

CHAPTER TWO

REVIEW OF RELATED LITERATURE

Introduction

The institutional framework for the creation of wealth in the free enterprise economies which brought the institution of the stock market into being in medieval Europe has throughout the succeeding centuries, continued to support the institution and to justify its existence ensuring its current placing today as the pivot of the capitalist economic system.

Today, the institution has sprouted in many countries spanning across the globe from Australia to Canada, from Hong Kong to Taiwan and from Kenya (Nairobi) to Biogota (Columbia), and many other countries of the world.

In many of these countries the exchange has served to facilitate the accumulation of savings and their efficient channelling into competing productive uses without violating the basic principle of free enterprises (Kemrgul and Levme (1996).

It is not only crucial, but also central to the entire capital mobilization process. This is chiefly because of the opportunity, which it offers for the continuous, trading in securities issued by fund users. Without this facility and the chance, which avails investors, to liquidate their investment or adjust their portfolio whenever they desire to do so, it is doubtful if there would be any incentive or motivation to invest in securities. Most savers would probably hold on to their funds in cash or bank deposit which guarantees that they would be able to meet the fundamental purposes of the saving, such motive is usually quite from a desire to invest. As a result, returns on the aggregate level of savings, it can also be speculated that in the absence of a capital market, the level of saving carried out in aggregate terms would be much lower.

The Development of Stock Market in Nigeria

The earliest one can reasonably finds some of the antecedents leading to the establishment of a stock market in Nigeria is 1946 when the ten year plan local loan ordinance was promulgated. The ordinance provided for the floatation of E300,000 (N600,000) local loan stock bearing interest at 3¼%. The loan stock which was issued in units of E10 (N20) had a maturity profile of 10-15 years. In the event, the issues was oversubscribed by E500,000 (1000,000). Not surprisingly however, only a small part of the issue was subscribed locally; the buck of the response being from the UK (Anao, 1970).

Another attempt at capital accumulation in the public sector was made in 1951 through the creation of a loan fund for financing some public utilities. The scheme was to be funded from public by collected revenues and from soft loans (bearing low interests rates and easy repayment terms) were made from time to time for the development of the relevant corporations. These and similar endeavours forming part of the implementation strategy for the ten year development plan, 1946-55, constituted the first significant attempts made under the British colonial

administration to give investment opportunities to Nigerians. They therefore mark the beginning of capital market development in Nigeria (World Bank, 1996).

It can be argued with the benefit of hindsight that these attempts did not amount too much and that the specific objective of developing a local capital market was not seriously or singularly pursued by the colonial administration. However, evidence exists pointing to the fact that the development of a local network of financial institutions also apart from the purely political issue of independence, engaged the attention of the early nationalities (Alile and Anano, 1986).

CHAPTER THREE

RESEARCH METHODOLOGY

INTRODUCTION

In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.

RESEARCH DESIGN

Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of hundred and twenty (120) questionnaires were administered to respondents of which 100 were returned. The analysis of this study is based on the number returned.

INTRODUCTION

RESEARCH DESIGN

CHAPTER FIVE

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS:

5.1 Introduction

This chapter summarizes the findings on the effect of central securities system(css) on the Nigeria stock market, Nigeria Security and stock exhange commission as case study. The chapter consists of summary of the study, conclusions, and recommendations.

5.2 Summary of the Study

In this study, our focus was on the effect of central securities system(css) on the Nigeria stock market, Nigeria Security and stock exhange commission as case study. The study is was specifically focused on examining the effect of Central Securities Clearing on the Nigerian capital market, assessing the effect of Central Securities Clearing System on investors’ confidence in the trading activities on the Nigerian stock market and identifying the effect that the share certificate dematerialization will have on the performance of trading activities on the Nigerian capital market.

The study adopted the survey research design and randomly enrolled participants in the study. A total of 100 responses were validated from the enrolled participants where all respondent are staff of Nigeria Security and stock exhange commission.

5.3 Conclusions

The capital market is a good barometer for measuring the pulse of a country’s economy. The trend in the volume/value of securities traded at the market. The market capitalization, and the all-share index are the important indicators which proved beyond-doubt that the introduction of the Central Security System (CSS) helped to enhance the efficiency in the stock market operations. The system is an innovation in the transfer of shares between sellers and buyers of security timely and this culminates into the development of Nigeria capital market to an enviable degree.

With respect to the analysis and the findings of this study, the following conclusions emerged;

Central securities Systemhave positive effect on the Nigerian stock Market
Central securities Systemhave positive effect on investors’ confidence in the trading activities on the Nigerian stcokMarket
Central securities Systemshare certificate dematerializations have positiveeffect on the performance of trading activities on the Nigeria capital market

5.4 Recommendation

Based on the findings the researcher recommends that;

Central securities system (CSS) services should be extended to capital trade points centers, in order to enhance the same efficient services.
The problem of macroeconomic instability has continued to be a hindrance to the development of the stock A macro-economic policy that would ensure long-term stability which essential attracts sustainable long-term investments is not stable. Frequent reversals of policies have often forced investors to disinvest by way of capital flight. The problem of lack of adequate coordination and harmonization of fiscal and monetary policies must be fully addressed by the fiscal monetary authorities. Moreover, the problem of political instability and as well as the issue of economic meltdown must be tackled using appropriate economic measures.
Government should give more attention to the poor state of public infrastructure such as power, telecommunications and inadequate information technology, which has to be provided by operations, which leads to higher operating cost.
Multiple Stock Exchange should be introduced in the country like other countries: USA, Hong Kong, South Africa, India etc.

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