The study investigated the
impact of information technology on the operation of the Nigerian
Capital Market. The study attempt to examine the implications of
innovation of information technology on Nigerian Capital Market. Also,
the study examined the extent to which the innovation of information
technology affect registrars in Nigerian. Hence, the Nigerian Capital
Market was chosen as the study area with which to carry out the research
work. In order to get reliable information from the
above institutions, questionnaires were distributed to the Capital
Market participants and stockbrokers. Personnel interviews were held
with selected traders alike. Questionnaire were collected after
responses were made, and information gathered from there were analyzed
hypothesis, formulated for the research work were also tested
accordingly. The findings showed that limitation in information
technology significantly affect the capital market and that the
introduction of computerization will not reduce the effectiveness of
registrars. Based on the findings and to ensure that the objectives off
computerization of the stock market is achieved, it was recommended that
securities and exchange commission should find a way of making its
similar, symposium and public enlightenment campaign more appealing so
as to carry along the market operators and members of the investing
public also, the capital market investment should be taught as a
compulsory source in tertiary institutions in the country.
TABLE OF CONTENTS
1.1 Background of the Study
1.2 Conceptual Framework
1.3 Statement of Problem
1.4 Objective of the Study
1.5 Research Hypotheses
1.6 Methodology of Study
1.7 Limitation of the Study
1.8 Definition of Terms
2.1 Structure of the Nigerian Capital Market
2.2 The key Players in the capital market and their functions
2.3 Instrument employed at the capital market
2.4 Instrument employed at the capital market
2.5 Instruments employed at the capital market
2.6 Regulatory bodies of Nigerian capital market the Securities and Exchange Commission
2.7 Functions of the capital market
2.8 Constituencies of the Nigeria capital market
2.9 Opportunities in the capital market
2.10 Mission Statement
2.11 Objectives of the Nigerian capital market
2.12 Challenges of the Nigerian capital market
2.13 How to Access the Nigeria capital market
2.14 Future Outlook
2.15 Computerized clearing and settlement system
3.1 Restatement of research questions and hypothesis
3.2 Restatements of Hypothesis
3.3 Research Design
3.4 Population in the study
3.5 Sampling design and procedures
3.6 Data collection schedule
3.7 Administration of data collection schedule
3.8 Procedures for processing and analyzing collected data
3.9 Limitations of the Methodology
PRESENTATION AND ANALYSIS OF DATA
4.1 Presentation of Data
4.2 Presentation and Analysis of Data According to Research question
4.3 Test of Hypothesis
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary of the Analyses
1.1 BACKGROUND OF THE STUDY
The capital market is that
arm of the financial market that provide facilities far mobilizing and
dealing in medium and long term funds. Its emergence is owed to the
development of a market oriented economy which is required as an
alternative source of funds to the money market for purposes of findings
The Nigerian capital
market (NCM) first came into existence in 1960 with establishment of the
Lagos Stock Exchange but became operational in 1961. The exchange was
incorporated under the companies ordinance as in association limited by
guarantee. The Lagos Stock Exchange was given inSSitial financial
backing by the Central Bank of Nigerian (CBN) in the form of annual
subvention. In 1977, following the reconstructed into the Nigerian Stock
Additional trading floors were also opened in the same year in
Port-Harcourt and Kaduna. The Nigerian Stock Exchange (NSE) is the
centre point of the capital market while the Securities and Exchange
Commission (SEC) serves as the apex regulatory body. It provides
mechanism for mobilizing private and public savings and makes such funds
available for productive purposes. The exchange also provides a mean
for trading in existing securities. To enable small as well as large
scale enterprises gain access to public listing, the NSE operates the
main exchange for relatively large enterprises and the second tier
security market (SSN) where listing requirement are less stringent for
small and medium scale enterprises. The exchange which started with only
19 securities traded on its floors in 1961, now has 279 securities made
up of federal government stocks, 62 corporate bonds and 108 equities
all with a total market capitalization to N 170 billion.
The origin of the capital
market in Nigeria can be traced to the year 1964 when the government
floated its first security. This was done informally as there was yet no
formal stock exchange. The instrument or stock in-trade of the capital
market in Nigeria are mainly company stock/bonds and units trusts.
Under the vision 2010,
Nigeria is expected to become the leading industrialized nation in
Africa with strong global economic influence. It is therefore expected
that the country would achieve a sustained annual Gross Domestic Product
(GDP) growth rate of 6.1% and the industrial sector contribution to
this would stand at no less than 30%. The manufacture sector is expected
to achieve a growth rate of less than 95. To achieve all these economic
development and growth objectives, finance definitely will play a key
role in the entire process. The Nigerian capital market is therefore
expected to play significant roles as a source of funds for economic
recovery and growth.
In recognition of this
fact, government was motivated to provide regulatory framework to
protect and develop the market. This role is performed by the Securities
and Exchange Commission (SEC). Being the apex regulatory authority in
the capital market, the commission ensures orderly, fair and equitable
dealing in securities and protects the 'integrity of the securities
market against abuse arising from insider trading in line with its main
objective of investor protection and market development.
1.2 CONCEPTUAL FRAMEWORK
With the introduction of
the electronic contributor system, the NSE is able to bean stock market,
operations to the outside world via the renters international
information network. The' late 1950's further witnessed an upsurge of
private industrial investments especially by foreigners who re-investing
profit earned from trading activities. Legislation for formalization of
a securities market in May 1958 with the setting up of the bareback
committee to consider ways and means of fostering a share market in
Nigeria. The adoption of the recommendations made by this committee by
government led to the legislation of the Lagos Stock Exchange in March
1960 (NSE). Today the NSE has about six branches spread over the
THE STRUCTURE OF THE NIGERIA CAPITAL MARKET
There are broadly classification:
- Primary Market
- Secondary Market
THE PRIMARY MARKET
This the market in which
public companies offer their new shares to the public issues of shares
of debentures take three principle forms.
Firstly, by right issues
and open offer which basically is a situation where the company invites
its existing shareholders to subscribe further capital required.
Secondly, by placing or
selective market this result when a company agrees to allot the whole
issue of securities at an agreed price to intermediary merchant bank or
corporate finance subsidiary of a commercial bank.
Thirdly, by public offers
which IS an invitation made to the public generally to subscribe for or
purchase securities of a company.
THE SECONDARY MARKET
This is the market in which registered operators trade securities previously issued on the primary market. Examples are:
- i. The Stock Exchange - Nigerian Stock Exchange
- ii. National Association of Securities dealer (NASO). Still in its formation stage.
- iii. Over the counter (OTC) market: It is on the market
that securities of public companies not quoted on the exchange are
marketed. The market is however yet to commence activities in Nigeria.
The following are the
implication of the innovation of information technology in the Nigerian
capital market and they are discussed respectively.
- Decreased use of manual labour
- Capital intensive
- Timely information
- Revenue for staff training
- Efficient information system
- Competition with foreign counterparts
- Rapid innovation
- Ability to adapt to technology changes
a. DECREASED USE OF MANUAL LABOUR
With the invention of
information technology, transactions and business would no longer
involve the use of manual labour unlike before, transactions would be
done via computers and the internet thereby leading to increase in
b. TIMELY INFORMATION
The innovation of
information technology in Nigeria capital market would enhance the
passage of information positively. Shareholders and other players in the
capital market would be able to access information at any time without
stress; from anywhere and at any time. Also the use of past offices and
other corner services would reduce with the innovation of E-bonus and
c. CAPITAL INTENSIVE
The innovation of
information technology would involve the use of more capital, therefore
arises the need to source for finance. The involvement of money would be
dominant while manual labour recessive.
d. REVENUE FOR STAFF TRAINNING
Source there is much
reduction of human labour, the little staff employment would have excess
funds to be catered with capital market operators would be able to fend
for their staff training and staff development.
e. EFFICIENT INFORMATION SYSTEM
The information system in
the capital market with the innovation of information technology would
be efficient, fast and reliable up to date information would be received
f. COMPETITION WITH FOREIGN COUNTERPARTS
With the innovation of
information technology in the capital market, the Nigerian capital
market would be able to compete with the foreign capital market; also
information would be easily passed and accessed.
g. RAPID INNOVATION AND DEVELOPMENT
Since information to
business is like blood to the body. Other innovations and development
aside information technology would automatically occur. There would be
lots of changes in the capital market e.g. customers relations,
h. ABILITY TO ADAPT TO TECHNOLOGY CHANGES
With the innovation or
information technology, it would be no problem for the Nigerian capital
market to adapt to coming technology changes.
1.3 STATEMENT OF PROBLEM
The statements of problem of this research study are:
- Extent of which the innovation of information technology Increase the effectiveness in the Nigerian Capital Market.
- The role of registrars in new issues.
- The benefits of computerization in share registration
4. The role of registrars in implementing the E-bonus initiative.
- The key players in the capital market and their functions
- The basic essentials of computerization.
- The book of the New' Nigerian Capital Market.
1.4 OBJECTIVES OF STUDY
- To understand the implications of innovation of information technology on Nigerian Capital Market.
- To know the extent to which the innovation of information technology affects registrars in Nigeria.
- To know the level of which computerization as gotten to in the Nigerian Capital Market.
- To know the role or registrars in new issues
- To understand the implementation of E-bonus, E-dividend and Certificate.
- To understand the extend of the relationship between registrars and the Central Securities Clearing System. (CSCS).
1.5 RESEARCH HYPOTHESES
Ho: The innovation of information technology will not significantly affect the capital market
HI: The innovation of information technology will significantly affect the capital market
Ho: The introduction of computerization will reduce the effectiveness of registration.
Hi: The introduction of computerization will not reduce the effectiveness of registrars.
1.6 METHODOLOGY OF STUDY
For this research work, both primary and secondary source of data collection are to be used.
The primary source of data
collection is the distribution of questionnaires and personal interview
with registrar's officials. Also the secondary sources are the
materials gotten from the registrars, internet, Securities and Exchange
Commission Library (SEC) and other written textbook and also current
materials on the issue.
1.7 LIMITATION OF THE STUDY
The following are the limitations to this research work:
- The unavailability of financial resource to carry out the research work.
- The inadequacy of information's provided by the respondents is also one of the limitations to this research work.
- Problem of squeezing time for school work and also research work.
1.8 DEFINITION OF TERMS
These are dealing members
of the exchange who practically do the buying and selling of instruments
on behal f of clients. Stockbrokers essentially execute orders on
client's instructions on the 1100r of exchange for a commission. This is
however a special class of brokers called jobbers who may buy and sell
on their own account in the process of achieving reasonable spread on
the transactions. It is a risky but highly rewarding business journalism
Typical transactions in
the capital market involve a large number of participants requiring
specializing handling and processing of records. Registrars handle this
simple working but often intricate role in the market. Even with the
advents of technology they remain an importantly, they maintain the list
of shareholders in a company and the consequential functions relations
to adjustment in such holding following subsequent transactions. They
also take the responsibility of dispatching dividend warrants, annual
reports, notices for bonus issues, annual general meeting etc. to
holders of instrument.
Trustees exist as
specialized institutions that undertake to monitor and ensure compliance
to contractual terms of issues by the key parties. This is particularly
the case of debt contracts and investment management relationship.
d. SECURITIS AND EXCHANGE COMMISSION
Securities and Exchange
Commission derives its power under section 8 of all the investment' and
securities Act No. 45 of 1999 to regulate and supervise all activities
in the capital market with a view to protect investment and to provide
the framework for capital market.
e. ISSUING HOUSES
This is the key
intermediary licensed by the apex capital market institution to assist
issuers in packaging offers in the market. They basically co-ordinate
the entire issue process, brings together all the other professionals
and either underwrites or arrange for the underwriting of the issue
where necessary. They undertake the all important role of pricing the
issue and generally advise the issuers on matters relating to the
success of the exercise.
f. NIGERIAN STOCK EXCHANGE
The Nigerian Stock
Exchange (NSE) is the organized primary and secondary securities market
in Nigeria. 1t was set up in 1960 as Lagos Stock Exchange and in 1977
the name was changed to Nigerian Stock Exchange. The Nigerian stock
exchange is a self-regulatory organization (SRO). In 1990, the exchange
changed its legal status to a company limited guarantee but retained
three classes of membership namely: Founding members, Ordinary members
and Dealing members.