Frequently Asked Questions - Stock Market

Ex-right date is the date on which a buyer of a stock is no longer entitled to rights that has been declared.

Investment in the Nigerian Capital Market through the Secondary Market.

Shares can be bought through the primary and the secondary markets.
The secondary market transaction occurs when shares are bought through the Stock Exchange.
Most times when shares are traded, they are done through the Exchange.
Shares bought on the floor of The Nigerian Stock Exchange (NSE) are traded electronically and cleared through the Central Securities Clearing System (CSCS).
The shares bought in the secondary market can be registered in two forms: Directly in the investors name or in a Nominee Name.
For shares registered in the Shareholder’s name:
Every shareholder must have an account opened for him or her in the CSCS. For every stockbroker you do business with, you will have an account. This account is called the Investor’s Account. However, every shareholder has a central identification (CSCS Number).
Investment through the NSE is usually done through a Dealing Member of the NSE (Stockbroker). Every BUY or SELL transaction done by the stockbroker is confirmed by his Purchases or Sales Contract Notes respectively.
Shares are traded into your CSCS Account and this is usually evidenced by the CSCS Statement of Stock Position.
After the shares are cleared and settled through the CSCS, the Registrars are notified of the investment by the CSCS and they include the investors name in the Register of Members. This will entitle the investors to various benefits that may accrue to him or her as a shareholder.
The more common benefits that may accrue to you as an investor are dividend and bonus shares. Since the shares are registered in your name and address, these benefits go directly to you, usually in form of dividend warrants or bonus share certificates.
Indeed, the basic work of the stockbroker for which we are paid commission ends when your transaction is executed and your name enters the Register of Members. Consequently, you have to keep track of the benefits that should accrue to you. This may require occasional visits to the Registrar.
For shares Registered in a Nominee Name:
The shareholder signs a Nominee Agreement and will have an account opened for him by the Stockbroker.
Investment through the NSE is usually done through a Dealing Member of the NSE (Stockbroker). Every BUY or SELL transaction done by the stockbroker is confirmed by his Purchases or Sales Contract Notes respectively.
Shares are traded into a Nominee Account and is evidenced by the Stockbroker’s Statement of Stock Position which can be obtained any time.
After the shares are cleared and settled through the CSCS, the Registrars are notified of the investment by the CSCS and they include the Nominee name in the Register of Members. Note that in the Register of Members, it is the Nominee Name that will be on record as the Shareholder though the ultimate Beneficiary is the Investor. The Nominee Name we use to hold our clients’ investment is WSTC Nominee Limited Clients' Account.
The more common benefits that may accrue to you as an investor are dividend and bonus shares. Since the shares are registered in Our Nominee Name, these benefits come directly to us usually in form of dividend warrants or bonus share certificates.
Under a Nominee arrangement, The Stockbroker keeps track of the benefits that may accrue to you as a Shareholder, credits the Clients’ account with such benefits when they become payable and may re-invest such benefits depending on the terms of the Nominee agreement.
Under a Nominee arrangement, the Stockbroker monitors and manages your investment, tracks its performance and gives you a Valuation Quarterly.
Our non-resident clients are saved the administrative problems of managing their shares by keeping them in a Nominee account with us. The Nominee account is usually recommended for Non-Resident investors and investors that require added confidentiality.

Yes.

To help investors achieve their investment objective, we offer loans which could be used for the purchase of shares. The collateral for this facility would be the existing shares of the clients and/or the shares that are purchased with the loan.

When you buy or sell shares, you incur the following charges:

Purchase of shares

Brokerage commission: - 1.35% of Consideration (negotiable).
VAT: - 5% of brokerage commission
SEC Fees: - 0.30% of consideration. (Consideration is the amount the investor wants to invest)
CSCS Fees: - 0.06% of consideration.
VAT: 5% of CSCS Fees
Stamp duty: - 15 kobo on every N200 or part thereof (0.075% of consideration)
Sale of shares
Brokerage commission: - 1.35% of Consideration (negotiable).
VAT: - 5% of brokerage commission.
CSCS: - 0.36%
NSE: - 0.30%
VAT: 5% on CSCS & NSE Fees
Stamp duty: - 15 kobo on every N200 or part thereof (0.075% of consideration)

A portfolio of shares is a combination of shares in various companies. These shares can be in different sectors i.e. Foods, Manufacturing, Banking, Petroleum, Conglomerates, etc. A portfolio helps a client reduce and spread the investment risk that could arise from the poor performance of a company or a sector.

As your stockbroker, we give quality advice that help our clients choose stocks that could give them good returns. Portfolio management would involve us choosing stocks on your behalf. We would rely on our research, knowledge and expertise to help clients achieve superior returns on their investments. This we would do for clients at an agreed fee.

There is really no specific amount of money you need to start investing in shares. However, some stockbroking firms have a minimum amount needed to open an account through them. Our minimum initial investment is N1,000,000 (approximately 4,000 pounds).

Maximum returns can mean different things to different people i.e. some investors would like to be able to achieve 100% returns on their investment. The period of time to get this return cannot be clearly specified, but we believe that investors that take a long-term view of the market on stocks of good companies would invariably maximize their returns. However, there are opportunities for making short-term gains from price fluctuations.

Yes, an investor can lose money on the stock exchange as a result of investing in inappropriately priced/valued stocks. It is also possible for an investor who invests in performing stocks to lose money when there is a general fall in prices of stocks. In this case such loss in value is temporary, as such stocks do not lose their intrinsic value even when the prices fall.