INTRODUCTION
In this chapter, which is basically the
review of relevant literature,
discussion would be focused on
description of the capital market as it efforts
Nigerian economic development for the period of 1993
-2002. In addition, the effect of other
companies and broking firms in the economic development and by comparing other
stock exchange outside the country in term of performances.
DEFINITION
OF STOCK MARKET
The stock market at times called the
capital market was defined by Dangall and Ganmnitz (1975) as the
complex of institutions and
mechanisms through which intermediate term trade and long term funds are polled
and made available to business, government and individuals and
instruments already outstanding are transpired.
Ajayi O. (1984) defined a stock market
as a market for the mobilization of funds from the savings deficit sector,
However, Burns and Midlay (1979) defiled a stock market as a market which
provides a focus for the activities of buyers and sellers of securities or
services.
Okafor F.O. (1983) agreed with this
definition, but went further to describe the market as covering all services
rendered by institutions and facilities which exist for mobilization of long
term funds and for channeling such funds to ultimate users.
More so, the capital market is a network
of individuals, institutions and instruments involved in the efficient
channeling of funds from the supply to deficit economic units.
The
capital market constituencies can be broadly divided into four categories,
namely:
(a)
Provider
of funds (Investors-Individuals, units trust and other corporate bodies).
(b)
Users
of funds (Companies and Government)
(c)
Intermediaries (Facilitators-stocking broking firms,
Nigerian stock exchange).
According to Alike and Amao (1986) the
stock exchange actually comprises several markets: that is within or annexed to
a market for existing securities.
There is again a market for debt
securities and market for equities. There is also market for example the
petroleum sector, sector for Breweries, pharmaceuticals, the exchange is
regarded as a market mainly for otherwise known existing securities as the
secondary market.
In the last decade, the federal governments
encourage the state and local governments as well as their resource gaps.
Consequently, five stage governments have raised loan capital on the market. In
1993, we listed the first Municipal bond-the Lagos Island Local Government 100
Million floating Rate Revenue Bond 1996/2000. The proceeds of the issue was
part of the financing for the New Sura Market on the Lagos Island.
However, with the introduction of the Structural
Adjustment Programme (SAP) in 1989 and the subsequent adoption of policy
instrument such as the foreign Exchange Market (FEM) the deregulation of
interest rate structure and divided policy, the Nigerian capital mark has
become a more viable option for strengthening their capital structure, for modernization and expansion of operations. In
the process, there has been a flurry of right. Issue offers for subscription
for equity and debenture stocks.
The stock exchange: it started its
operation as the Lagos state stock exchange in 1961 as a non private company
limited by guarantee.
When branches of the stock exchange were
append at Port Harcourt and Kaduna in 1978. The name was changed to the Nigerian
stock exchange. The objectives of the Nigerian, stock exchange “it is the
machinery for the mobilization of private and public savings and making them
available for productive investment through stocks and shares to facilitate the
purchase and sale of securities amongst others.
It is primary
purpose and objectives are
(a)
To
provide facilities to the Nigerian public and now the international investing
public for the purchase and sale of stock and shares of any kind and for the
investment of money.
(b)
To
control the granting of a quotation on the stock exchange in respect of funds,
stocks and shares of any company, government, municipality, local authorities
or other corporate bodies.
(c)
To
investigate any irregularity or alleged irregularity in the dealings of members
with their client.
(d)
To
investigate any irregularity or alleged irregularity in the dealings of members
with their client (inside dealings), any differences or disputes between
members and their clients, any complaint made against members by other members
of any other parties, provided that such differences disputes or complaints
shall relate to or touch on the stock broking business or activities of such
members or deal with and decide upon such irregularities differences, disputes or complaints shall relate to or touch on the
stock broking business or activities of
such member or to deal with and decide
upon such irregularities difference, disputes or complaints and to take necessary steps for enforcement of its
decision s and awards.
(e)
To
promote, support, propose legislature or other measures affecting the above
mentioned objects and objectives.
(f)
To
standardize and review from time to time if necessary of desirable, increase or
decrease the fees of other charges to be made by members for services rendered
to their clients or modify the method of assessing or calculating such fees or
charges.
(g)
To
calculate the stock broking activities of members and facilitate the exchange
of information for their mutual advantages and for the benefit of their clients
and to offer facilities whereby the public can be informed of prices of shares
dealing by members.
(h)
To
co-operate with the Association of stock-Brokers and stock exchanges in other
counties and to obtain and make available to members, information and facilities
likely to be of advantage to them or clients.