These are the Procedures and Steps For Buying Shares In Nigerian Capital Market. Investment of shares in the capital market can be convoluted unless you have professionals to guide and direct you.
Savings and investments definitely are crucial steps that help people to become financially independent. Although there are a lot of things one can invest his money to but among the top ones are investment in shares and stocks. Nevertheless, it is only a few people that are courageous and bold enough to deal with all the figures that are necessary in the buying of shares. There are other things one has to be fully aware of their meaning, manner of operation and operation of terms like dividend, ordinary shares, preference share, debentures, percentages, money in kobo and so on.
Despite all the complications investing in the stock market is among the best road maps to financial freedom. All you need to achieve this is to get the services of an expert to make your dreams come through.
The first step that one must take to buy shares in the stock market is to save money that would be used for this investment. After that the next thing to be done is to get a good and trustworthy brokerage or stock broking firm. Through the firm, you would be able to open an account with the Central Securities Clearing System, which will make it possible for you to buy shares.
An individual who is interesting to trade in shares you cannot buy shares yourself but through a stock broking firm. If you want to buy from the primary market: that is the one that the company advertises directly, in filling the forms, they ought to state the name of their stockbroking firm and their CSCS account number.
If you want to invest in the secondary market, you must inform their stockbroker, who will help you to buy buy shares from the stock market on a daily basis. Anytime your stock broker wants to buy stocks for you he will buy it into your CSCS account.
Anytime you trade in the Nigerian Stock Exchange market, the accounts that are used in trading are known as CSCS accounts. Therefore, investors ought to have CSCS accounts.”
Therefore the steps involved in buying of shares in the capital market are listed below:
- Meet with a broker
- Open a CSCS account with him
- Broker will take your shares to Unity bank Registrars in order to verify the certificate
- Certificate is brought to CSCS for dematerialization by the Registrars after confirmation that you are the true owner
- Open a special account with CSCS (Optional)
- Monitor you stocks Online with CSCS (Optional)
- Monitor your stocks through your broker’s web portal(Optional)
- It will take less than 24hrs for your shares to be dematerialized as soon as it is sent to CSCS.
Commissions and fees are assessed on a descending scale that is standard across all brokers. For transaction amounts less than N1, 000,000 (roughly $6,350.00) you will pay 1.86% when purchasing a stock and 2.19% when selling one. For bigger transactions, commissions and fees of 1.49% of the total transaction value to buy would be paid and 1.82% of the total transaction value to sell would be paid.
Opening a Nigerian Brokerage Account
We have provided below the procedures for opening an account with a Nigerian stockbroker and buying your first shares.
1: Fill the CSCS Account Opening Form
The Central Securities Clearing System (CSCS) records the ownership of Nigerian securities through electronic accounts. When you request an account opening from a broker, you will be sent a copy of the CSCS Account Opening Form and be assigned with a CSCS account number. This number will go with every Nigerian stock trade you carry out, permitting the CSCS to track record of all your holdings in the country.
2: Fill in the Broker’s Account Opening Form
After your first email to the broker asking information on how to open an account, they will as well send you a blank account opening form. The form basically requires revelation of your passport number or other valid ID number, your address, and banking details.
3: Get two color passport-sized photos of yourself
You may as well get a cluster of them while you’re at it. They always appear to come in useful.
4: Make a duplicate copy of your passport or ID number
If you don’t have a valid international passport, a copy of your driver’s license is also acceptable.
5. Get a photocopy of your recent Utility Bill
The photocopy of a recent utility bill is required to certify your place of residence. The majority of brokers need a water or electricity bill dated within the immediate past three months.
6. Submit the original CSCS form, account opening form, passport photos, copy of your ID, and copy of your utility bill to your broker through DHL or FedEx
You may email photocopies of all documents to your broker to get started fast on the account opening procedures, but they may eventually receive the original documentation. Also, to be on the safer side send it through a registered mail sevice like DHL or FedEx. The uses of registered mails are costly yet they’re more reliable and efficient than the postal service.
7. Transfer money to Your Brokerage Account
After opening your trading account, your broker will supply you with its bank details so that you can fund your account. The most effective way to do this is through wire transfer. If you haven’t done an international wire before, you may take your broker’s bank details to your local bank branch and ask them to help you to go through the essential steps. They’ll ensure that your funds arrive steadily. Be aware that the majority of US banks charge about $25 for outgoing international wires.
8. Tender a Trade Order
You’ve made research and discovered a stock that you’d love to buy. What will you do next?
A few brokers will ask you to sign a trade mandate form while other brokers would only require you to send them an email providing them with instructions and what to trade on. You need to be aware that a few shares in the Nigerian Stock Exchange market are relatively illiquid, therefore it is advisable that you mention your limit price for everyone of your orders. This will assist you to refrain from paying significantly more for your shares than you had planned to pay.
Your broker will then execute your trade and send you a contract note that indicates the buy or sell price, commissions, and fees. Settlement of share trades takes four business days on the Nigerian Stock Exchange, therefore if you’ve sold shares, don’t expect to receive the proceeds of a sale before that period unless you’re willing to sustain a penalty or charge for settling the trade more speedily.
Obtaining dividends from Nigerian stock market is comparatively easy. Once you open your account, merely give instructions to your broker (in writing) that you would like all dividends paid on your holdings to be transferred directly into your trading account.
The steps required to start investing in Nigerian stock markets is as simple as that.
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