In any economy there is a financial systemÂ that is responsible for regulatingÂ the financial environment of the society determining the typesÂ and use of funds to be issued, source of funds to be put. The financial system is really madeÂ up of two major markets, namely money and capital stock market. The many market is the market for short term funds and securities including treasury bills, treasury certificate negligence of deposits, commercial paper and other funds ofÂ Â which are less than a year duration.
Thus theÂ aim of the regulating bodies composed of Nigerian stockÂ exchange commission (SEC) is to promote development ofÂ orderly capitalÂ market to have authority over its members (stock broking firms) to whom it setÂ rules of ethics are made to guide theirÂ professional behaviour in the course of carryingÂ out its functions and create awareness of the general public. Stocks exist to enable companies in need of long term financing to sell pieces of the business stock equity securities in exchange for cash. This is the principal method of raising business capital other thanÂ issuing bonds. When the stocks of these corporations, which all which corporationsÂ must issue, are owned by the public at large, including both private investors and institutions, they are said to be publicly held. These publicly held shares can be easily traded (sold) to other investors in the stock market and areÂ thusÂ said to be liquid,Â orÂ readily conversed to cash. Stock breakage firms usually, serve as intermediaries in the transactions, buying the new securities at wholesale prices from the issuer and then reselling them toÂ the investing public at retail prices
HISTORICAL DEVELOPMENT OF CASE STUDYÂ Â IN NIGERIA STOCK EXCHANGE
The dealing members of the Nigeria stock exchange are institutions who are licensedÂ by the exchange as stockbrokers to buy andÂ sell securities quoted on theÂ exchange on behalf of the investing public.
In 1960, Nigeria stock Exchange was established with branchÂ in Kaduna in 1978. Prior to the establishment of the Nigeria stock exchange the were not equipped enough with the information of stock broking and its importance to an individual, groups, organizations and global economic development.
In essence the awarenessÂ was low but from 1936 to date a considerable number of stock broking firms sprang up in Nigeria and inÂ Kaduna particularly the first stock brokingÂ firm served as an eye opener to investors and the potential ones, with a highly experienced board and a crop of seasoned andÂ Â dedicatedÂ professionals positioned to tackle the challenges of this new millennium. The branch is situatedÂ in Kaduna to exploit the immense untapped natural resources and economic potentials of the country in general.
There are today 226 dealingÂ members of the Nigeria stock exchange. Many of them are affiliates of bank and other reportable financials institutions. Dealing members ofÂ Â Nigeria stock exchangeÂ can now accommodate foreign shareholders in their equity capital or go into any form of partnership with foreign stock brokerage firms.
Application from foreign stock brokers as members of theÂ Â nigeran stock exchange canÂ now beÂ enter anted within theÂ rules and regulations of the inorganic stock exhcnage, as well asÂ registration with securities and exchangeÂ commission and corporate afiars commission following the abrogation of the exchange control Act 1962 and Nigeria promotion Decree ofÂ 1982 as stated in the Nigerian stock exchange fact exchange book 2004 page 334.
Finally, theÂ existence of stockÂ broking firms asÂ members ofÂ Nigeria stock exchangeÂ hasÂ helped to create aÂ wealthy tomorrow for clients and increaseÂ the wealth of shareholders and job creation for theÂ unemployed.
1.2Â Â Â Â STATEMENT OF PROBLEM.
Capital market are generally expected to produce the institutional arrangement through which funds from the surplus sector of the economy. The allocation of funds are mainly for industrial, commercial and agricultural development. The capital market growthÂ rate is very slow and not developing to meet the international standard. There is lack of awareness on theÂ part of the public and potentialÂ investors.
Poor management for the operation and affairs of a business is one the major factorsÂ leading to incompetence, inefficiency and dishonesty in managing organization in Nigeria and in the global which has notÂ been in the best interestÂ of the shareholdersÂ and the general public. However, the need in thatÂ over-centralization of the stockÂ exchange which might not bring the benefit of market operation nearer to a greater section of the countryâ€™sÂ citizenry and thisÂ will not enhance the particularly of the market function.
Dishonesty from bothÂ the stockÂ broking firms and the investors are among the general problems facingÂ stockÂ shares investmentÂ in the country and the world at large. However, the need in that of overÂ centralization of stock exchange which might not bring the benefit of market operation nearerÂ toÂ a greaterÂ section of the country citizenry and this will not enhance the performance of the market functions.
1.3Â Â Â Â HYPOTHESIS TESTED
Hypothesis is a tentative proposition suggested as a solution to a problem or an explanation of phenomenon. It is also a set of generalized statement concerning the problem under study.
The formulationÂ of whichÂ led to the structuring of questionnaires to assess the validity of the hypothesis by sampling various of stock brokers and customers of firms in Kaduna stockÂ exchange.
The hypothesis is given below (1) Ho that there are inefficient stock marketing servicesÂ Â from stock broking firms to the development of a meaningful economy (2) Hi that there areÂ efficient stock marketing services from stock broking firms to the development of a meaningful economy.
1.4Â Â Â Â AIMS AND OBJECTIVES OF THE STUDY
The aim of this research is to undertake incentive investigation and to highlight the role stock broking firms have played in the development of Nigerian economy. To determine whether or not there are lapses in their contributions to the economy growth, however, in the event of any lapses suggestion which be made. The primary objectives of the research are to a basis for contribution to the development of Nigerian economy. And to provide a material for further studies.
1.5Â Â Â Â SIGNIFICANCE OF THE STUDY
The significance of this study less in the benefit that the findings would provide to any individual group and organizations. Considering the importanceÂ Â of capital markets in the development of the Nigerian economy and the role of stockÂ broking firms and both the Nigerian stockÂ exchange commission in regulation the operational activities in the market, this research, this research work is intended to bring to lineÂ light the contribution of theÂ bodies to assist the capital markets for it to achieve the desire optimum results. Also this study is in practicalÂ fulfillment for the award of diploma in accountancy.
1.6Â Â Â Â SCOPE AND LIMITATIONS OF THE STUDY
Due to financial constraints and limitedÂ time at the researchers disposal, the researcher should limit this study in the following areas.
Buying and selling of shares
The regulatory bodies i.e. Nigerian stock exchange and securities and exchange commission.
The functions of stock brokingÂ firms
1.7Â Â Â Â DEFINITIONS OF TERMS
Securities: these are stock and share that areÂ traded in stock exhcnage market.
Portfolio: The adimixture of shares and bondsÂ laid by an individual or institutions.
Regulation: Transaction on the exchange are regulated by the Nigerian stock exchange as a self regulatory organization (SRO), and the securities and exchange commission (SEC) which administers the investment and securities Act 1999.Â
Pricing: prices of new issues are determines by issuing houses/stock brokers which on the secondary market prices are made stock broker only.
Intermediaries: the intermediaries are the financial institutions and dealersÂ that facilitates the borrowing andÂ Â lending ofÂ short term money.
Bond: Government stick/bonds are long dated loans stocks, issued by the federal government of Nigeria and state governments, the federal government e.g. treasury bill are usually regarded as gilt-edge securities with no attendant risks. Because of the superior risk rating, their yields are usually lower than other similar securities.
Preference Stock: StockÂ on which dividend payment must be made before profits are distributed to holders of ordinary stock.
Dividend: Payment of share of profit, toÂ shareholders in a business company, orÂ assets to creditors (e.g. of an investment company)Â orÂ to a policyÂ holder in aÂ mutualÂ insurance company, to pa a dividend of 10Â percent, dividend warrant, orderÂ on a bank to pay a dividend.
Bonus: An extra dividend to stock holders of a shareholders.
Brokerage: Brokers commission for services.
Equity stock: ordinary stocks and shares not bearing fixed interest.
Capital gains: when a stock is purchased at a given price. Then subsequently at a higher price, the resultant profit is known as a capital gain.
Speculative activity: trying for such â€œbuy low, Sell highâ€ profits over a short time span known as short term trading.
Long term: When stocks that have been held for more than a year are sold at a profit.Â