The global financial system and technology have made trading on stocks more possible and the Nigerian Stock Exchange is not an exception. This Nigerian Stock Exchange has it’s origins in Lagos and now has up to 180 companies by the year 2016. Regulations of the Nigerian Stock Exchange comes from the Securities and the Exchange Commission.
How Do You Invest In The Stock Market Of The Nigerian Stock Exchange?
- a) Choose your stock category for investment
This is the first step and you choose the type of stock. It can be individual stock, traded funds and the rest of the indices. Much difference exist in these different stocks. Buying shares in a firm makes you a partial owner of the firm.
- b) Open an account under a brokerage firm
Investors will have to register or open an account with a brokerage firm and this is before proceeding. Up to 327 brokerages exist and they have their license from the Nigerian Stock Exchange.
Take the following processes to get a brokerage account:
- i) Fill in the account opening form of the CSCS
The Nigerian body which is the Central Securities Clearing System (CSCS) do the record keeping of securities and this is with electronic method. When you request to open this account as an investor, CSCS number will be sent to you. This number helps you in trade and keeping of records.
- ii) Fill in the Broker’s form for account opening
You can request for the information of the broker and it will be forward to you. Fill in your banking details, address and ID details.
iii) Get your 2 colored passport photographs
Come with passports and this should include a copy of your own international passport. You can also give out an utility bill and this verifies your own residue. Electricity bill or water supply are among the requirements.
- iv) Document submission
Send the original form of CSCS and also include your passport photos, ID copy and a copy of your utility bill. This submission is through FedEx or DHL.
You can also do the sending of your documents using mail, this proves to the brokerage that you have sent documents that are original. Make sure they get the original documents and this is before you open the account.
2) Fund your account opened with the brokerage
Get the bank details of the broker and begin the funding and this is after you open the account.
3) Do the submission of your trade order
You now proceed with a trading instruction towards the broker and this is through mail. This specifies the price limit and helps to prevent unnecessary high paying of shares. Brokers may ask for a mandate that is signed and then they can go on with trade execution.
They also send a note of contract to the investor and settlements is from the fourth day. You can access the cost for trading from the standard scale and this is constant. There are commissions and fees and this is dependent on whether you are buying or selling.
4) Dividend payments
You may issue a payment instruction to the broker and this is after opening the account. This is normally paid and deposits happen directly to the account for trading.
Investing in the Nigerian Stock Exchange can be profitable and this is what this article tells you how to do. Ensure you fill in accurate details and use appropriate brokerages. Don’t forget to ask your questions.