THE NIGERIAN STOCK MARKET AND THE ROLE OF STOCKBROKERS IN THE STOCK PRICING: (CASE STUDY OF APEX SECURITIES ENUGU)
 ABSTRACT
Stock Market facilitates the buying and selling of securities, such as shares and bonds.  They also perform two valuable functions, which is liquidity and pricing securities.A stockbroker is one whose job is to buy and sell stocks and shares.  This project will probe into the objective and importance of stock market and the role of stockbrokers in terms of stock pricing.Questionnaires were used in collecting data for this research.  The following findings were made:
(1)   Stockbrokers are quite different from investors
(2)   Stockbrokers and investors are partners in progress and it such co-operate is desirable.
(3)   The prices of stock are not stable at all.
(4)   Nigerian Stock Exchange is underdeveloped.
(5)   Inadequate infrastructures used in issuing houses highlighted hinder the progress of this business like other businesses.
TABLE OF CONTENTS
 Chapter One
1.0              Introduction                                       
1.1       Background of the Study                  
1.2              Statement of the problem                  
1.3              The purpose of the study                               
1.4              Scope or delimitation of the study
1.5              Research questions                                         
1.6              Hypothesis                                                     
1.7              Significance of the study                               
Chapter Two
2.0              Review of Literature                                      
2.1       The Nigerian Capital Market                         
2.2              The Nigerian Stock Exchange                                   
2.3              Functions of the Stock Exchange                  
2.4              Dealing on the Exchange                                           
2.5              Problems of the Nigerian Stock Exchange                
2.6              Pricing on the primary market                        
2.7              Pricing on the Secondary Market                  
2.8              Pricing of Securities                                                   
2.9              Factors affecting stock prices            
2.10          Stockbrokers.                                     
2.11          Types of Brokers                                                        
2.12          Summary of Literature Review                                 
Chapter Three
3.0              Methodology                                                 
3.1       Research Design                                                        
3.2              Area of Study                                                            
3.3              Population of the study                                                         
3.4              Sample and sampling                         
3.5              Instrument for data collection                                   
3.6              Validation of the Instrument                         
3.7              Reliability instrument                                                 
3.8              Method of data collection                             
3.9              Method of analysis.                                                   
Chapter Four
4.0              Presentation Analysis and Interpretation of Data
4.2              Summary of findings.                                    
Chapter Five
5.0              Discussion, Implication and Recommendations        
5.1       Discussion of the Results                                           
5.2              Conclusion                                                                             
5.3              Implication of the Results       `                                  
5.4              Recommendations                                                     
5.5              Suggestions for further research                                
5.6              Limitations of study                          
5.7              References                                                     
Appendices I                                                              
Appendices II                                                            
LIST OF TABLE
1.         Nestle Food Nigeria PLC
2.         Nestle Food Nigeria PLC Profit and Loss Account
3.         Distribution of Respondents in Relation to Sex
4.         To what extent does changes of securities and their value affect the stockbrokers in the progress of the business.
5.         How long does it takes to deliver share certificates to their investor even when the transaction has been concluded
6.         To hat extent are the issuing houses, stockbrokers and their telegraphic services adequate to the business
7.         Does Education and training have positive influence on members of public on regular trading of shares like other businesses?
8.         Test of hypothesis.
CHAPTER ONE
INTRODUCTION
The Nigerian Stock Exchange, which started as the Lagos Stock Exchange came into being by the Lagos Exchange Act of 1961, following the report of the Bareback Committee, set up May 1958, by the Federal Government, to advise on ways and means of fostering a share market in Nigeria.  The Lagos Stock Exchange was subsequently incorporated on 15th September 1960 but began operations on 5th June 1961.  The Lagos Stock Exchange was on 2nd December 1977 transformed into the Nigeria Stock Exchange with branches now in Kaduna, Port-Harcourt, Ibadan and Onitsha.  The report, which was published in 1959 recommended the following.
(i)                 The creation of facilities for dealing in shares.
(ii)               The establishment of rules regulating transfers.
(iii)             The introduction of facilities to encourage the issuance of financial securities by the government and firms.
(iv)             The reduction or elimination of stamp duties on transfers and the elimination of tax deductions at source, including measures to encourage savings and issue of securities of government by the government and other organizations.
1.1              BACKGROUND OF THE STUDY
It is a well known fact that Nigerian Economy is being restricted in its multi-dimensional facts with great emphasis on high local content manufacturing process, Agro-Based Enterprise and improved management of hydrocarbon resources.  No doubt, the on-going adjustment of the Economy needs large financial commitment.
A substantial portion of the financial requirements for the adjustment will have to be met through the assistance of the capital market.
A capital is the cornerstone of any financial system.  Since it provides funds needed for financial not only business and other Economic Institutions but only the business and other business institutions and also the programmes of government as a whole.  It is essentially the market for long-term funds and securities such as stocks, debentures and bonds lasting and even sometimes indefinitely.
The market is made up of financial institutions which act as intermediaries in the transfer of funds from saver to users.  These include the Stock Exchange, share registers, issuing houses, stockbroker and underwriters.
The Nigerian Stock Exchange is a market where stocks and financial obligations of companies and government are bought and sold.  A stock is a share of assets or ownership of a company with limited liability.  It represents ownership of a fraction of a company’s building, machines and other assets.  The stock market provides facilities for the exchange of these ownership rights.  It is very essential that exchange facilities be provided so that investors can select which company to invest in.
In otherwise, Nigerian Stock Exchange like any other recognized stock exchange is an organized auction market where buyers and sellers meet through their brokers to effect transaction or securities that have been listed or quoted, while stocks are capital or a business company, a position of which is held by different investors.
MEMBERSHIP OF THE STOCK EXCHANGE
There are three classes of membership in the exchange, thus foundation members, ordinary members and dealing members.
FOUNDATION MEMBERS
These are members who signed the Exchange Memorandum of Association on 5th September for the incorporation of the exchange in accordance with chapter 37 of the Nigerian Companies Act.  These members who individually bought five shares each at N20 per share were:
C. T. Bowring and Co. (Nigeria) Ltd.
Chief Theophilus Adebayo Doherty
John Holt (Nigeria) Ltd.
The Investment Company of Nigeria Ltd.
Sir, Odumegwu Ojukwu
Akintola Williams
Alhaji Shehu Buker.
ORDINARY MEMBERS
These are members who on application are admitted to the membership of the exchange.
DEALING MEMBERS
These are members who carry on the actual business transactions of the Stock Exchange.  They may be individuals, firms or corporate bodies licensed by the council of the Stock Exchange to deal in shares stock and any other securities that are quoted on the Exchange.  These members are categorized into Brokers and Jobbers.
THE ROLE OF THE BROKERS AND THE JOBBERS
All dealings on the Stock Exchange are made through the brokers and jobbers, who must be approved and licensed members of the Stock Exchange.
The broker is an agent (acting on behalf of a principal) for the buying and selling to the public, of stocks on a commission basis at rates fixed and supervised by the Exchange itself.  All buying and selling order received form the clients (the public) are negotiated with the jobbers by the brokers, as the jobbers are not allowed to deal directly with the investing public.
Brokers are employed by some other people on account of their knowledge of market conditions and procedures and because of their expert knowledge of the commodities dealt on.  They are usually paid commission for their services known as “brokerage”, proportionate to the vale of the transactions in which they have been engaged.
There exits brokers for different stock in accordance with their areas of expertise.  The jobbers are the actual dealers in securities but transact business only with the brokers who on behalf of investors.  They equally specialize in particular types of shares-gilt-edged mining shares, oil, food, drapery, stores, etc.  When dealing in financial securities, they quote two prices; the higher being the selling price while the lower is the buying price, the difference between the two is known as the “Jobber’s turn” and this is his profit.
Jobbing backward is the practice of stressing the past performance of a company or trust as an inducement to new investors, as usually contained in a prospectus relating to an issue of additional shares by a unit Investment Trust.
However, at the Nigerian Stock Exchange, the role of the jobbers is dominated the brokers.
THE BILL:
This is a speculator in the market, more particularly in the Stock Exchange, who buys securities in expectation of a rise in their prices.  A market is said to be bullish when buyers predominate over sellers.
THE BEAR:
This little is given to a speculator in the Stock Exchange who sells securities in anticipation of a fall in their prices.  And when sellers dominate the market, it is said to be bearish.
The actions of both speculators are aimed at maximizing profits.
THE RATIONALE FOR THE NIGERIAN STOCK EXCHANGE
(i)                             To provide an avenue for the purchase and the sales of financial instruments b the Nigerian public.
(ii)                           To design a code of conduct for the participants.
(iii)                         To standardize fees chargeable by members.
(iv)                         To determine the granting of a quotation on the Exchange.
(v)                           To ensure a dispute free dealings
(vi)                         To encourage broad based ownership of business enterprises.
(vii)                       To co-ordinate the activities of members and foster the dissemination of information to the benefit of members and clients
(viii)                     To adopt measures to ensure the attainment of the above objectives among others.
1.2       STATEMENT OF THE PROBLEM
There is no problem until where exists unsold difficulty or untapped opportunity.  The experience of our Stock Market will not be complete without recounting its challenges and problems which are historical institutional and structural.  Perhaps the most important significant changes in the problem of number of securities and values of such securities.
However, the market is characterized by infrastructural inadequacies, which directly affect the transactions between issuing houses, stockbrokers and their telegraphic services.  The drag in delivery of share certificates to investors makes to show little interest in the Stock Market.
Furthermore, the ignorance on part of some members of Nigerian public who believed that the aim of buying shares is to keep it and receive dividends.  Share need to trade regularly for Stock Market to function effectively.
Another significant problem is the degree of responsiveness of the stockbrokers to their activities and stockbroker’s attitude that causes dissatisfactions.  And another fundamental problem is the determination of securities, in which investors wish to invest in and at what price.
1.3       PURPOSE OF THE STUDY
            This study is aimed at achieving the following:
(i)                             To ascertain the significant changes of numbers of securities and their values affect the stockbrokers.
(ii)                           To ascertain the easy way of delivery of share certificates to investors even when the transaction has been concluded.
(iii)                         To find out the extent in which telegraphic services used in issuing houses by stockbrokers are adequate to the business.
(iv)                         To ascertain ways in which of education and training will have positive influence to members of public on regular trading of shares like other businesses.
1.4              RESEARCH QUESTION
In order to determine the extent and level of stockbrokers and investors in exchange market, it is pertinent to test the following questions;
(i)                 To what extent does changes of securities and values effect the brokers?
(ii)               How long does it take to deliver share certificates to their investors even when the transaction has been concluded?
(iii)             To what extent are the issuing houses, stockbrokers and their telegraphic services are adequate to the business?
(iv)             Does Education and Training have positive influence on the members of the public con regular trading of shares like other businesses?
1.5              HYPOTHESIS
The following null hypothesis shall be tested in this research work.
1.         There is no significant difference {P < .05} between the mean perception of senior and junior staff of Apex Securities Ltd. Enugu, on the changes of securities and their values that effect the stockbrokers.
2.         There is no significant difference {P < 0.05} between the perception of senior and junior staff of Apex Securities Ltd. Enugu, on time it takes to deliver share certificates to the inventors even when the transaction had been concluded.
3.         There is no significant difference {P < .05} between the perception of senior and of Apex Securities Ltd. Enugu, on inadequate telegraphic services used in issuing houses by stockbrokers.
4.         There is no significant difference {P < 0.05} between the perception of senior and junior staff of Apex Securities Ltd. Enugu, on positive influence in which education and training have to members of public on regular trading of shares like other businesses.
1.6              SIGNIFICANT OF THE STUDY
The importance of the stock market in an economy cannot recall to too emphasized since it plays a very significant role in the development process, directly and indirectly as a result of the provision of funds needed for financing business and government institutions.
This work is beneficial to all banks such as Central Bank, Commercial Banks and Community Banks.  Also to Nigerian Stock Exchange Market.  Students who may use this as related while writing similar or related topic might find this work useful.