How The Nigerian Stock Market Works

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The stock market is an entity that most people have heard of but just a few have actually explored. There is a mystique that has built up around the idea of stock market that makes the average Nigerian citizen feel like the stock market is just meant for some people, the finance experts.


(Image Source: African-markets.com)

What Is A Stock Market?

A stock market and a stock exchange are the same thing. They are regulated platforms where corporate (companies, industries) and government securities are sold. There are several types of corporate stocks and they all have their own rules when it comes to being bought and sold.

The Nigerian Stock Exchange (NSE) is the center point of the stock market in Nigeria. It is a self-regulating body which belongs to the private sector and has about 200 listed companies. The Security and Exchange Commission (SEC) which is supervised by the Federal Ministry of Finance is the main regulatory institution of the Nigerian capital market. The body plays an oversight role on the Nigerian Stock Exchange.

How Can A Person Buy Or Sell A Stock?

In order to actually buy or sell stocks on the Nigerian stock market, you have to be a licensed trader. The traders work for brokerage houses and those houses take orders to buy and sell stocks from customers. It is easiest to do your stock buying and selling through a stock broker who you can work with over the phone, in person or over the Internet.

Stocks can be bought either directly from the issuing company, or from other traders looking to sell their stocks. In rare instances, companies will buy back their stocks on the exchange floors for a variety of reasons. But, for the most part, stocks are sold to other traders who have orders to fill.

If a trader is trying to sell a stock for a customer and there are no buyers, then the trader will be unable to sell that stock and the customer will benefit from any gains or absorb any loses that may occur.

A stock market is usually a prime indicator on the financial health of a country's corporate sector. It is a dynamic place where fortunes are made and, just as quickly, fortunes can be lost.
 
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