The Nigerian Stock Exchange

The Nigerian Stock Exchange (NSE) was started in 1961 and was formerly called the
Lagos Stock Exchange. As at March 2003, over 200 securities could be traded on the
Nigerian Stock Exchange. The NSE has its head office in Lagos, with branches in
Port Harcourt, Kaduna, Onitsha and Ibadan, Kano, and Abuja. Shares are traded
from 11:00AM to 1:00PM on the NSE from Monday to Friday with the exception of
public holidays. A computer system is used by dealers (stockbrokers) to buy and sell
shares. This computerized system known as the ATS (Automatic Trading System)
allows dealers to enter buy and sell orders for shares into a computer which matches
the buying and selling orders at the matching prices.


The Securities and Exchange Commission

The SEC is the government agency that regulates the stock market. Its function is to
protect the investor and to build a strong stock market. The SEC passes and enforcesregulations to which quoted companies must abide.




Stockbrokers

As a private investor you cannot buy shares from the stock market yourself, you have
to go through a stockbroker. A stockbroker is licensed to trade shares on the floor of the stock exchange. Stockbrokers charge a commission termed brokerage for this.
The brokerage fees charged by stockbrokers are regulated by the Securities and
Exchange Commission (SEC).


For example, if you buy shares worth N10,000.00
you pay* -

Brokerage commission = 2.75% of 10000.00 = 275.00
Sec Levy = 1.00% of 10000.00 = 100.00
Contract stamp = 0.075% of 10000.00= 7.5
VAT =5.00% of 275 = 13.75
Total = N396.25


And if you sold shares worth N10,000.00 you pay a total of


Brokerage commission = 2.75% of 10000.00 = 275.00
NSE levy = 0.25% of 10000.00 = 25.00
CSCS = 0.25% of 10000.00 = 25.00
Contract stamp = 0.075% of 10000.00= 7.50
VAT = 5.00% of 275 = 13.75
Total = N 346.25


These rates may change over time.


Stockbrokers also provide you with investment advice. They may offer to manage
your investments for you. Stockbrokers also assist companies which want to float
(launch) new shares and bonds on the stock market.

To buy shares you need to open an account with a stock broking firm. Just like banks,stock broking firms require you to have a minimum amount before you can open an account with them. Some of the big firms will need you to have at least N100,000.00 while some smaller firms can open an account for you with just N2,000.00. The money you use to open the account with the stockbroker is your money and is used to buy shares for you. You are not paying it to the stockbrokers. The stock broking firm profits by taking a commission from every trade they carry out for you.