Functions of the Nigerian Stock Exchange

The Nigerian stock exchange is undoubtedly one of the most important contributors to the Nigerian economy.   The number of investors is increasing. In simple terms, the Nigerian stock exchange is a market place.  This is the place where you buy stock and sell stock. People trade in stocks and securities here.

The idea is to buy stocks when their prices are low and sell them off when they appreciate considerably.  Information is very important for the investor in order to know which stock to buy and when to sell such stock.

A number of factors, like the history of the stock, its perception, cost and quality, can go a long way in determining which stock to be bought or sold off at any particular time.  The stock trader needs to keep the stock with him/her after purchasing till the stock appreciates considerably in value.

What are the functions of the Nigerian stock exchange? They are discussed below

The Nigerian stock exchange creates Medium via which investors in the Nigerian stock market can disposable income to buy products (stocks and securities) with the belief that such product will rise in value in the future.

They are regulated by the Securities and Exchange Commission.  This regulatory body has the mandate to ensure Surveillance over the activities of the Nigerian Stock Exchange. This helps to prevent breach of market rules. It also helps detect and deter unfair manipulations and trading practices.

The Nigerian Stock Exchange base its activities on automated trading system.  They publish data of performance on companies listed n the Nigerian Stock Exchange on the Nigerian stock; such performance data are published on annual, quarter, monthly, weekly and daily basis.

The automated trading system being used by Nigerian Stock Exchange started operation in 1999.  The dealers can use the system to monitor market activities without visiting the Nigerian Stock Exchange.  Many of those dealing in the stock market do so right from their offices.

The Nigerian Stock Exchange presently has 13 branches across Nigeria and they plan to establish more in the nearest future. They start trading by 9:30 in the morning and wrap things up by 2:30 pm from Monday to Friday.

The legislation that was initially preventing foreign investors to operate in the ingrain stock exchange had been abolished by the Nigerian government. This means foreign companies can be listed on the Nigerian Stock Exchange and this enables Nigerians to invest in such companies.

The Nigerian Stock Exchange was deregulated by the government in 1993.  This means issues prices are now determined by stockbrokers and issuing houses.  Stockbrokers alone determine prices of the secondary market.

Below are some of the other roles of the Nigerian Stock Exchange

  • They provide open forum for people to buy and sell securities.
  • They provide opportunities for businesses to raise funds
  • They help to curb liquidity in the country’s economy and this is done by facilitating buying and selling of all types of securities.
  • They protect the public from sharp practice ad shady dealings by providing guiding rules.
  • They facilitate dealing in government owned securities.
  • They encourage people to make savings.
  • They act as medium for dissemination of information to investors and industrialists.