Efficiency of the Nigerian Stock Exchange

It is a known reality almost everything done by man entails the use of funds or money surrogates. Indeed the world we live in today cannot survive in the absence of money. Money enhances capital accumulation which often promotes financial growth. This is essentially how come the capital industry was created- to make procedures for much easier access to pay for which is used intended for developmental reasons and other businesses. In fact , for a nation to formulate there is a serious need for that nation to get a functional and efficient capital market of which the stock exchange is the hub.

A capital market, which is a part of the financial market, can be constituted as soon as a network of financial organizations interact to mobilize and allocate long-term funds in to productive investment. The long term cash are sold for financial assets released by consumers or bought and sold by slots of recently issued possessions. Therefore , the administrative centre market acts an important function of joining together deficit and surplus products of an overall economy. The lack of this kind of function makes the capital marketplace useless because the opportunity to get investment and production of products and solutions for advancement is eradicated. This creates a gap where surplus products have nonproductive funds and the deficit devices are searching for funds pertaining to investment. The main city market hence provides services that are essential to a modern economic system, mainly simply by contributing to capital formation through financial intermediation, financial prediction services and managerial skill development. It also promotes profile diversification which ensures investors can increase returns prove assets and minimize risk towards the barest lowest. Consequently, a competent capital marketplace optimizes the amount of savings that finances purchase. (Odoko 2004)

Capital marketplaces can indeed produce or mar a country. The surplus devices are mostly made up of individuals and organizations. On the other hand, the deficit units consist of organizations and the government. The administrative centre market helps large amounts of money to be collated from different sources. (Ekineh 1996)

Fundamentally, the Nigerian capital companies are divided into 2 separable, but closely related segments. These are generally;

1 . The primary market

2 . The secondary market

The primary market is one particular where fresh securities happen to be issued and offered to the general public. It also provides the means for authorities and corporate physiques to raise refreshing capital. The securities traded here could possibly be stocks, stocks, bonds and debentures. (Udo 2002).

The secondary marketplace, on the other hand, is usually one in which usually buyers and sellers trade on recently issued investments. It is often likened to a market for second-hand goods. However , unlike these, in which beliefs of goods are much less than those of brand new, most securities distributed or bought in the secondary market ranking pari passu with those issued inside the primary marketplace. Indeed the efficiency with the primary industry rests on the efficiency with the secondary industry. This follows from the reality very few persons will be willing to buy new securities if perhaps they do not provide an assurance penalized able to convert it to cash whenever you want they deem suit. The extra market thus provides fluid to shareholders. The ease of securities' conversion into cash is a crucial determinant of the efficiency in the secondary industry and indeed the capital market generally speaking. Therefore the extra market assists in the savings and investment procedure, and finally, the growth and economic advancement a nation.

The individuals in the Nigerian capital industry can be classified into two. These are;

1 ) The Government bodies

2 . The Operators

The regulators consist of;

I. The Securities and Exchange Percentage (SEC)

II. The Nigerian Stock Exchange (NSE)

III. The Institute of Capital Industry Registrars (ICMR)

The providers include;

I actually. Issuing properties

II. Registrars

III. Brokers/Dealers

IV. Expenditure managers/portfolio...

Recommendations: Suzuki, T. and Yasuda, Y. (2006), " Market Microstructure and Stock Rates: Firms and their Selection of Trading Mechanism inside the JASDAQ Market”, Tokyo school of Science Discussion Conventional paper, Series, Ms-05-02.

Ogbu Um. (2006). " Saturday Suite” Thisday: The Saturday Magazine, Saturday 11, February, Web page 30 and 31

Soludo C

Beechey M, Gruen D, Vickrey J. (2000). The Successful Markets Hypothesis: A Study. Reserve Bank of Down under.

Countrywide Planing Commmision (2004) Countrywide Economic Empowerment Development Strategy (NEEDS) draft publication.

Central Bank of Nigeria. (2000): The Changing Structure of Nigeria's Overall economy and Ramifications for Development, Abuja: CBN Research Department.