Do you have a stockbroker?

INVESTMENT TALK WITH EMMA

Emmanuel Ewumi

(Over 20 years investing experience in Nigeria’s financial markets)

One of the decisions we have to make in 2014, is to open a stock-broking account with one of the over 200 registered stockbrokers in Nigeria. A stockbroker is a dealing member of the stock exchange and he provides services to anyone who wants to buy and sell shares.

Do you know that many shareholders in Nigeria have never been to a stockbroker’s office? Because all their stocks were purchased through the primary market and they have never had any cause to sell. An investor who wants to derive maximum benefits from the stock market should not restrict his or her stock purchases to the primary market. You need to buy and sell stocks in the secondary market through stockbrokers before you can enjoy benefits of the market.

For between N5000 and N5000000 one can open a stock-broking account with a stockbroker. Finding a stockbroker should not be a problem, the problem is in finding an efficient and honest stockbroker. As a matter of personal policy, I do not deal with stock-broking houses that are one-man businesses I prefer stockbrokers that have structures and are owned by reputable institutions.

Shares are usually bought in lots of 100, when you give your stockbroker the order to buy, he will buy your shares at the best price in the market at that time through the stock exchange trading floor except you gave the broker a price limit. You become the owner of the shares from the time the deal is done and a contract note will be mailed to you.

When you want to sell your shares contact your stockbroker, tell your broker the share you want to sell. He will give you a sale order form to fill. Once the shares are sold the proceeds can either be paid into your bank account, stock-broking account or be used to purchase other shares depending on the mandate given by you to your stockbroker.

In case you have share certificates, you have to give the stockbroker your certificate for verification at the registrar of the company. After verification, the registrar will send it to Central Securities Clearing system (CSCS). Then the shares will appear in your CSCS statement or printout.

SERVICES OF STOCKBROKERS

1. They provide professional advice on the selection and management of investment.
2. They help in the purchase and sale of securities.
3. They help investors in planning their investment.
4. They assist businesses and governments to raise money through the capital market.

What are you still doing? If you do not have a stock-broking account make sure you open one before the end of this month.

THE ROAD TO VICTORIA ISLAND

An ebook by Jarus