THE IMPACT OF STOCK EXCHANGE REFORMS ON NIGERIA CAPITAL MARKET ( A CASE STUDY OF LAGOS STATE STOCK EXCHANGE)

ABSTRACT

The need for the establishments of the Nigerian stock Exchange (NSE)  was borne act of government is efforts offered to grapple with the growing budget deficit of the late 1980’s to stem the outflow of fund from the country and to mobilize adequate funds for its development programmers. The Nigerian stock exchange (NSE) which was incorporated on the 15th of December June 1961

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

The impact of the global financial crisis devastating for the Nigeria capital market has given the Security and Exchange Commission (SEC) opportunity to reposition the Nigerian Capital Market to play a pivotal role in capital formation and the development of the Nigeria economy. The aim is to build a world class market which will effectively compete for long term capital internationally; attract and retain domestic capital and be the principal source of medium to long term capital to the industry, both large and small scale industry.

Basically, a stock exchange was established to assist in this mobilation of adequate fund for development programme through such action as;

1. Enhancing the liquid nature of share and bonds by making them easily disposable and saleable.
2. Providing and guaranteeing a free and continuous market for the capital already invested by facilitating the exchange of security within minimum delay.
3. Lastly, in the absence of market distortions and imperfection, prodiding adequate mobility of capital and direct the flow of funds to profitable and move successful industrial enterprise for developments. However, he needs to mention briefly some important aspect of the listing requirement on the Nigeria stock exchange (NSE) among them are.
4. Size of Capital: A total equity of the company must be at least I million (although by special dispensation there is only quoted company with a paid up capital of N904,900).

1.2 Statement of The Problem

The reforms of the stock exchange market create serious problems in the capital market since all banks need to readjust to meet up with the reforms.

The impact of the global financial industry in diversifying and adoption of new are banking and use of information and communication technology ICT in the banking has expose the need to carry out in-depth research on how the stock exchange reform on Nigeria capital market.

1.3 Research Hypothesis

        Ho:    There is no significant relationship the organization of the stock exchange and the capital market.

         Hi:     There is significant relationship the organization of the stock exchange and the capital market.

1.4 Purpose of the Study

The main aim of this study is to consider the impact of recent re-organization of the Nigeria stock exchange on the capital market.

 Also, the extent to which this recent re- organization has gone on the activities of the Nigerian stock exchange will be explained

Finally, the extent to which the exchange has achieved it regulatory roles in the capital market.

1.5 Significance of the Study

This study apart from fulfilling academic requirement also has the following significance.

1.6 Scope of the Study

The scope of this study will be limited to the regulatory role being played by the Nigerian stock exchange (NSE) on the capital  market emphasis will be land on the Nigerian stock exchange only. This is done to the fact that the (NSE) is a vegetable organ for capital market.

1.7 Limitation of the Study

It is normal for human being to face one problem or the in achievement of as particular objectives. Therefore, we met numerous difficulties in carrying out this assignment.  

The problem can be traced to lack of finance in getting to various companies for adequate information gathering which might have encircled the project.

There are also the problems of getting in touch with some important personnel in the organization who could provide the fund information needed in the research.

Another difficulty that was faced id that management is not allowed to divulge further information.

1.8 Brief History of Nigerian Stock Exchange (NSE)

Nigerian stock exchange (NSE) was initially known as the Lagos stock which was established by Lagos stock exchange Act of 196.

The company was incorporated on the 15th of September 1960 and started full operation on the 15th; of June 196,

The Nigerian stock exchange was a product of professor R.H Bar back; committee setup in 1958 by the federal government of Nigeria to consider ways and mansis of promoting a stock market in Nigeria.

The committee report was handed over to the government 1959 and the white paper came out the same year. The principal recommendation of professor Bar back committee were

1. The creation of facilities for dealing in shares and stock
2. Provision of rules and rules and regulation govern transfer of shares and stock.
3. Reduction or elimination of stamp duties our transfer

The Nigerian stock exchange is located along bread street hognose and it is the first stock exchange in West African sub region and the sixth in the sixth in the continent of Africa.

The equity capital of the exchange as its inception was N10, 000 spit with 500 shares of 20,000 each.

1.9 Organization Set-Up of the Nigeria Stock Exchange

The Nigeria stock exchange (NSE) as mentioned either, has three branches (trading floors) in Lagos, port- Harcourt, Kaduna, Ibadan, Onitsha, Kano, Yola, and Abuja. It is governed by a national board called “The council” is presided over by a presided and the Administration by Director General.

Each branch has a branch council the director of the branch exchange is a member of the branch council. Each is represented on the national council of the stock exchange.

The council performs some vital duties it makes policy and considering complaint about and among the members are some of the duties of the council. It is the council that grants quotation or listing of securities, finally its maintain orderly market and prevents price fluctuation.

1.10 Member of Nigeria Stock Exchanges

There are basically two types of member

1. Foundation Members.
2. Ordinary Members.

FOUNDATION MEMBER: There are member who signed the memorandum and articles of articles of association (MEMAR) of the company in 1960, when the exchange was incorporated under section 37 of the Nigeria companies act the member concerned then were.

1. C.T Binding and co (Nigeria) limited.

2. Chief therplutus Adebayo Doherty.

3. John Holt (Nigeria) Limited.

4. The investment company of Nigeria (ICON)

5. Sir OdumegwuOjukwu

6. Mr. Akintola Williams (Chartered Accountant)

7. Alhaja Sheller Booker.

Each of these members took up five shares PF M20.00 each (value N100.00).

ORDINARY MEMBERS: These are member admitted into the exchange through application of the foundation member hard the taken off of the stock exchange.