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Who is
a stockbroker?
A firm or a
person who buys and sells securities on behalf
of investors for a commission called
"brokerage". The commission charged is regulated
by The Stock Exchange.
What is
an issuing house?
As a member of
The Stock Exchange, it is a merchant bank or a
dealing member that helps to prepare
prospectuses, to sell new securities offered to
the public by companies and governments.
What
are Securities?
Securities are
written or printed financial documents by which
the claims of holders in specified property are
secured. The could be stocks, shares, bonds and
debentures traded on a Stock Exchange.
What
are Stocks and Shares?
Stocks and Shares
represent ownership interest in a business.
What
are Bonds and Debentures?
They are other
kinds of securities. They are legal documents
representing a promise by the company or by
Government (in case of a bond) to pay back a
loan plus certain amount of interest over a
definite period of time.
Who is
an investor?
A person or an
institution who uses his savings or borrowings
to buy securities.
How are
stocks and shares bought on The Stock Exchange?
Stock and Shares
are bought and sold on The Nigerian Stock
Exchange through Dealing Members known as
Stockbrokers
Who
should buy shares?
Anyone who is 21
years and above qualifies to buy shares in
Nigeria. Parents who may want to buy shares for
their children are supposed to buy such shares
in their own names and later transfer them to
the children when they attain the legal age of
21 by nominal transfer.
With
how much money should one venture into the Stock
Market?
Most income
levels can venture into stock market. Some
wealthy people and institutions invest thousands
or even millions of naira but lower investors
can participate with as little as fifty naira.
Can
shares be transferred?
As stated above,
an investor may transfer part or all of his
shareholding to a relation, wife, son, daughter
or brother, etc. Where they all bear the same
surname, the transfer is known as Nominal
transfer. However, it is also possible for an
investor to transfer some or all his
shareholding to a daughter who has got married
or even his son-in-law. To effect this transfer,
the investor should contact a stockbroker. Even
in the case of a dead shareholder, his shares
can be transferred to his children or sold as
the case may be.
Which
stocks should I choose?
That depends on
what you want from your investments. The stocks
quoted (or listed) on The Nigerian Stock
Exchange range from Government stocks to
ordinary shares and their dividends vary from
low to high. The important thing is to determine
your own objectives first, discuss with a
stockbroker and then invest accordingly.
What
are scrip or bonus shares?
These are new
shares made fully-paid by the capitalization of
reserves and allotted free of charge to ordinary
shareholders in proportion to their existing
holdings. In this process, fractions of shares
sometimes arise and are often aggregated and
sold, after which a cash payment in respect of
the fraction is made to every shareholder
entitled to it.
What
does Xsc mean?
It is a financial
expression for "without the scrip". A stock that
is purchased during the without the scrip period
will not earn a scrip declared in that period
for its new owner.
How are
any of these securities bought?
By filling an
application form contained in a prospectus or
through a Stockbroker.
What is
the evidence of the purchase of shares and
stocks?
If purchased
through a prospectus, receipts are seldom
issued, but cheque stubs and counterfoil of
Postal Orders can serve the purpose. If bought
through a Stockbroker, a contract note in lieu
of receipt is issued.
What
does a Stockbroker charge for his services?
A Stockbroker
charges a commission called "Brokerage". The
charges vary, depending on the kind of services
provided. However, charges by Stockbrokers are
controlled by the Council of the The Nigerian
Stock Exchange.
What
does an investor gain by buying shares?
- Dividend
which is part of company's profit
- Bonus
shares - i.e. extra shares fully paid out of
reserve which are distributed to existing
holders.
- Capital
appreciation as market prices of shares
increase.
- Right to
attend meeting of shareholders and
participate in its deliberation as voting
members.
- Use of
share certificate as collateral for bank
borrowing
Can an
investor come to buy and sell on The Stock
Exchange?
No. He can only
do so through Stockbrokers who are licensed to
represent investors and trade daily on The Stock
Exchange.
What
other services do stockbrokers provide?
- Provide
professional advice on the selection and
management of investments.
- Act as
Issuing Houses and Portfolio Managers.
- Assist
project sponsors to raise money on the
Capital Market.
How are
the activities of Stocbrokers controlled?
As members of The
Nigerian Stock Exchange, they agree to and are
regulated by a body of Rules and Regulations
which dictate their relationship with The Stock
Exchange, their clients and other members.
Why are
Stockbrokers' activities regulated?
The regulating of
Stockbrokers' activities is done to protect the
investing public and maintain public confidence
in the buying and selling of securities.
How are
the current prices of securities traded on the
Nigerian Stock Market known?
The Nigerian
Stock Exchange publishes a "Daily Office List"
which gives full information on the changes in
the prices and earnings of the Listed
Securities.
Who do
I approach when I have problems with a share
certificate or dividend?
The Registrar of
the Company.
Who is
a Registrar?
A registrar in
common parlance is a keeper of records in
respect of quoted stocks and shares.
What
are duties of a Company Registrar?
- Act as
Agents to the Companies who appoint them.
- Register
the shares and the names of the owners in
the members' (shareholders') register.
- Prepare
share certificates and send them to the
shareholders.
- Pay-out
approved dividend to shareholders.
What is
Second Tier Securities Market (SSM) and how is
it different from other Securities Listed on The
Stock Exchange?
All Securities
traded on the Stock Exchange are listed
Securities. The SSM was introduced to assist
small and medium sized companies that are unable
to meet the requirement of the first-tier market
in raising long-term capital.
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