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Role of Participants of The Stock Market

The document discusses the roles and activities of various participants in the Nigerian capital market. It outlines the functions of brokers/dealers, issuing houses, investment advisers, registrars, underwriters, trustees, and portfolio/fund managers. For brokers/dealers, their key roles include purchasing/selling securities on behalf of clients and maintaining proper records. Issuing houses are responsible for coordinating public offerings. Investment advisers provide financial advisory services and recommendations. Registrars maintain ownership records. Underwriters guarantee funding for public offerings. Trustees and portfolio managers handle assets on behalf of beneficiaries and investors.

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164 views16 pages

Role of Participants of The Stock Market

The document discusses the roles and activities of various participants in the Nigerian capital market. It outlines the functions of brokers/dealers, issuing houses, investment advisers, registrars, underwriters, trustees, and portfolio/fund managers. For brokers/dealers, their key roles include purchasing/selling securities on behalf of clients and maintaining proper records. Issuing houses are responsible for coordinating public offerings. Investment advisers provide financial advisory services and recommendations. Registrars maintain ownership records. Underwriters guarantee funding for public offerings. Trustees and portfolio managers handle assets on behalf of beneficiaries and investors.

Uploaded by

Daniel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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www.covenantuniversity.edu.

ng

Raising a new Generation of Leaders

THE ROLES AND ACTIVITIES OF


PARTICIPANTS IN THE CAPITAL
MARKET; FUNCTIONS AND DUTIES.
Dr. (Mrs.) Adegboye F.B.
Banking & Finance Dept.
Introduction
• Capital market is a financial market that provides facilities
for mobilizing and dealings in medium and long-term
funds.
• Participants in the stock market are Securities Exchanges,
Brokers/Dealers, Issuing Houses, Registrars and
Investment Advisers.
• The Nigerian Capital Market plays the unique role of making
funds available for economic development and growth.
• A detailed review of the Nigerian Capital Market was carried
out in 1996. This led to the enactment of the Investment
and Securities Act (ISA) No. 45 of 1999.

2
Market Operators
• Broker/dealers
• Issuing house
• Investment adviser
• Registrar
• Underwriters
• Trustees
• Portfolio/fund managers
3
Functions/Responsibilities of Brokers and Dealers
 Purchase / disposal of securities on behalf of himself or
clients.
 Trading on registered securities Exchange.
 A broker/dealer in the discharge of his function must not allow
its indebtedness to exceed 200 percent of his net capital.
 A broker/dealer is enjoined to keep separate account of his
client and maintain proper and adequate record of his
transaction on behalf of his client.
 A broker / dealer is prohibited to solicit deposits through
brochures, salesmen.

4
Contd.
• Introduction of primary market security.
• Gives investment advisory services
• Portfolio/fund management
• Credit advancement to their clients and charging interest.
• Underwriting
• Development of new product and technique
• Monitoring of closure of register
• Dispatch of relevant document to clients and other parties.
• Delivery of proceed of sale of security to transferor
• Delivery of certificates to transferees of securities where applicable
• Effective regular interaction with relevant functionaries

5
Acid Test for Appointment of Brokers and Dealers.

• Registration with appropriate authority


• Commission/Margin should be moderate
• Financial Status –
- Adequacy of capital base
 Adequacy of asset base
 Liquidity
 Ability to provide bridging finance
 Ability to take deferred payment

6
Contd.
 Ability to underwrite singly or arrange a consortium to
underwrite
 Ability to honour its obligation as at when due.
 Disposition to deliver, on time, the proceeds.
• Experience.
• Goodwill.
- Is the broker/dealer known in the industry.

7
Functions & Responsibilities of Issuing Houses
• Acting as agent of issuer for purpose of primary
issues
• Coordinating activities of other professionals
and parties to an issue
• Preparing registration statement, prospectus
and other offer documents.
• It offers professional advice.
• Sourcing of capital through loan syndication,
issue of securities, & debt conversion.
8
Contd.
• Fund Management.
• Project Finance
• Packaging/Floatation of An Issue
• Marketing Securities
• Underwriting of issues
• Financial intermediation

9
Functions of Investment Advisers
 Financial investment advisory services;
 Making recommendation as to type of securities to buy or sell
 Provision of information or report regularly to clients on
developments in the security market
 Publication of financial market periodicals.
 Provision of consultancy services
 Evaluation of various securities to determine their investment
qualities.

10
Functions of Registrars
 Opening a register of members or bond holder at the
conclusion of initial or subsequent offers.
 Maintenance of register of members.
 Effecting transfer of securities when there is need for.
 Acceptance of lodgment of documents in respect of
concluded transactions or gifts.
 Preparation of new certificates for directors/company
secretary’s signature in respect of new purchases.

11
Contd.
 Dispatch of annual report and account to
members of companies.
 Dispatch of dividend warrants to ordinary
shareholders.
 Collation of return in respect of public offers
 Direct linkage with the clearing corporations or
company.

12
Classes Of Underwriting Identified In The Nigerian Capital
Market
 Best effort.
 Stand-by.
 Firm underwriting.

13
Trustees
• A trustee holds and manages properties or assets for
the benefit of other person or institution (Beneficiary)
• A trustee protects the interest of investor.
• The specific function could be on debenture, a unit
trust scheme, real estate etc.

14
Portfolio/Fund Manager
• Corporate body that receives fund from investors of
fund
• Manage such funds in terms of investing the fund
• Investment inline with approved portfolio mix and
investment objective and policies.

15
Thank You for your
Attention

16

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