Accounting Project Topics

An Evaluation of the Impact of Regulatory Bodies in Developing a Viable and Sustainable Capital Market (A Case Study of Nigerian Stock Exchange)

An Evaluation of the Impact of Regulatory Bodies in Developing a Viable and Sustainable Capital Market (A Case Study of Nigerian Stock Exchange)

An Evaluation of the Impact of Regulatory Bodies in Developing a Viable and Sustainable Capital Market (A Case Study of Nigerian Stock Exchange)

Chapter One


The objective of this study is to seek for the means of relaxing the stringent control measure put in place to regulate the activities of the Nigeria stock exchange to make it run smoothly and effectively.

To educate and sensitize Nigerians who are ignorant of the investment opportunities that are available in the Nigeria capital market. If about 160 million or half of the population invest in the capital market that will bring about a viable development and sustained growth in the Nigerian capital market.



This chapter attempts to look at different literatures written by different scholars in the past on capital market.

Capital market is a financial market that provide facilities for mobilizing and dealing in medium and long term funds. The players on capital market are the operators who act as intermediaries between the providers of funds and the funds users. They include Securities Exchanges, Brokers / dealers, Issuing houses, Registrars and Investment advisors. In the pursuance of making funds available for economic development and growth the Nigerian Stock Exchange (NSE) was established in 1960 as the Lagos Stock Exchange. In December 1997 it became the Nigerian Stock Exchange with branches established in some of the major commercial cities of the country. Each branch has a trading floor. The branch in Lagos was opened in 1961: Kaduna, 1978: Port Harcourt, 1980: Kano, 1989: Onitsha, February 1990 and Ibadan August 1990: Abuja October 1999 and Yola April 2002. Lagos is the head office of the Exchange. New trading floors have also been recently opened in Benin, Abuja, Uyo, Ilorin and Onitsha.

The Exchange started operation in 1960 with 19 securities listed for trading. Today, April 2008, there are 217 securities listed on the Exchange. The total market capitalization as at December 2008 stood at N9.5 trillion about ($80 billion). All listings are included in the only index, the Nigerian Stock Exchange All share index. The Exchange maintains an all share index formulated on 3rd January 1984. It opened at 100. Only common stocks (ordinary shares) are included in the computation of the index is value relative and is computed daily. As at December 2008 the all share index of NSE stood above 54,000.

Transactions on the Exchange are regulated by the Nigerian Stock Exchange, as a self regulatory organization and the Securities and Exchange Commission (SEC). Recent laws given by SEC to guide the market is that any public offer should be 80% underwritten and the absorption of funds for over subscribed public offers should not exceed 25%. About three million individual investors and a host of institutional investors use the facilities of the Stock Exchange.

CLEARING, DELIVERY & SETTLEMENT: Clearing, Settlement and Delivery of transaction on the Exchange are done electronically by the central securities clearing system limited (CSCS) a subsidiary of the stock exchange. The CSCS Limited (the clearing house) was incorporated in 1992 as part of the effort to make the Nigeria stock market more efficient and investor-friendly. Apart from clearing, settlement and delivery the CSCS offered custodian services.

STOCK MARKET REGISLATIONS: Transaction in the Stock market are guided by the following legislations among others:

  1. Investment and Securities Decree No. 45 1999
  2. Companies and Allied Matters Decree 1990
  3. Nigerian Investment Promotion Commission Decree 1995

INTERNATIONALIZATION OF THE STOCK MARKET: Following the deregulation of the capital market in 1993, the Federal Government in 1995 internationalized the capital market, with the abrogation of laws that constrained foreign participation in the Nigerian capital market.

Consequent upon the abrogation of the Exchange Control Act 1962 and the Nigeria Enterprise Promotion Decree 1989 foreigners can now participate in the Nigerian capital market both as operators and investors. Also there are no limits any more to the percentage of foreign holding in any company registered in the country except for the banks which the Central Bank has put a peg of maximum of 10%. Ahead of this development, the Exchange has since June 2, 1987 linked up with the Reuters Electronic Contributor System. The online global dissemination of stock market information – trading statistics, all share index, company investment ratios and company news (financial statement and corporate action).





In this chapter, therefore the researcher gives detail step by step procedures used in carrying out the research work which will not only make it simple for readers to see the study as a whole, but may also help to clarify the procedures as a whole, but may also help to clarify the procedures for the investigation the researcher has adopted.

These procedures include the nature of data collection, methods of collecting data, the areas covered in the course of collecting data and the method used in the analysis of data collected.


This refers mainly to the area covered by the researcher for data collection. In this particular case the whole staff of the Nigerian Stock Exchange Kaduna Branch in their various departments and sections were covered.

The sample size occurred when a number of units are selected from the research population to represent the impression of the population (group) under study. The sample size is made up of selected respondents from Expenditure Control Section, the Treasury department, Main Accounts Section of the officer of the Accountant, the Cashier’s office and the Budget department.

A sample size of 40 staff of the following hierarchy of the Nigerian Stock Exchange Kaduna branch, five (5) staff of the management level, ten (10) senior staff of the middle management level and fifteen (15) at junior level.




This chapter is primarily designed for the presentation and analysis of data obtained in the course of this research, the hypothesis will be tested and interpreted in this chapter. This implies that data collected will become meaningless until it has been analyzed and interpreted to brign home information from it.





A global survey of capital market categorized the market into developed markets and emerging market. A close look at those countries with such developed markets such as USA, UK, Australia etc can convince a reader that the capital market has much to offer to the society. In the same vein, emerging markets which Nigerian Capital Market is one equally have a role to play in the Nigerian Society.

This study therefore attempts to look at the impact of the regulatory bodies in developing the Nigerian Capital Market with particular reference to the Nigerian Stock Exchange which is the nerve centre of the Nigerian Capital  Market.

Contending views of researchers about the performance of the Nigerian Capital Market where looked at in chapter one.

Research questions were also raised to enable the researcher have a focus on the subject matter. The significance as well as the rationale behind the study were also stressed to inform better appreciation of the study.

A review of related literature was undertaken to know what views researchers hold on the matter (i.e. the stock market). In the course of doing that, brief history of the Nigerian Capital Market was traced from inception. The Regulators and Operators of the Exchange were discussed as well as various instruments.

In chapter three, basic research methods which include descriptive and statistical analysis were discussed. The method for data collection for the study which was basically primary was also stated. The researcher went further to discuss various techniques used in data analysis (which is chi-square and simple percentages and tables) and the justification for the choice of such techniques.

The history of Nigerian Stock Exchange was traced from inception to date. Data were collected and analyzed to assess the performance of the Exchange during the period under review (i.e. from 2005 – 2010).

Another issues considered were the level of compliance with the regulations of the Exchange in Capital Market development. The research finding revealed the general low performance of the Nigerian Capital Market. The conclusion, limitation of the study and various recommendations are highlighted below.


A research can hardly be free of limitations. This research work was not an exception in carrying out this study, the following constraints were encountered.

  1. Financial Constraint: The researcher faced financial constraints resulting in his inability to go to Lagos floor of the Nigerian Stock Exchange where the bulk of the activities are being carried out.
  2. Time Constraint: Because of time constraint the researcher could only visit Kaduna floor of the Nigerian Stock Exchange and the Securities and Exchange Commission in Abuja.
  • Conflicting Views and Figures: There are conflicting views from different authors about the same issues and figures supplied by the two main components of the capital market (NSE & SEC). Sometimes these views are at variance which pose a problem to the researcher. In spite of the above limitation encountered, the researcher was still able to get all the needed data for the research work.


The capital market is an indispensable tool for economic growth and development of any nation. In view of this, the research was based on an evaluation of the impact of regulatory bodies in developing a viable and sustainable capital market with special emphasis on the Nigerian Stock Exchange.

Based on the research findings, it was revealed that the securities traded on the Nigerian Stock Exchange have enhanced the listing of more Nigerian companies on the floor of the Nigerian Stock Exchange. The introduction of modern technology (computerization) in the market such as central securities clearing system and linking with Reuters to mention but a few. Another positive impact is the enhancement in capital formation and level of investment.


In line with the findings and conclusion of this study, it is deemed appropriate to make the following recommendations:

  1. There is the challenge of low awareness about the operations and benefits of the capital market in the economy. There should be increased and better enlightenment program through public lectures, seminars and symposia to create awareness about the functions and activities of the Nigerian Capital Market.
  2. The stringent listing requirements of the Exchange should be reconsidered to allow more participation.
  3. More so, there is need to canvass for self-regulation in the institution of capital market as well as the cooperation and full commitment by operators towards the challenges employing professionalism and maintain high ethical standard of management.
  4. Efforts should be made to study the securitization of other kinds of debt instrument with the view to further assist the development of an active and vibrant private debt securities market to complement the market in equities and government securities.
  5. There should be establishment of more branches of the Nigerian Stock Exchange so as to cover a wider segment of the country.
  6. It was discovered in the course of the findings that it takes a long time for a company to get quotation on the Nigerian Stock Exchange. The Exchange should improve on this so as to allow many intending companies to get quote don the stock exchange. The time frame of processing application by the Exchange should be reduced.
  7. To improve the share determination by the Nigerian Securities and Exchange Commission or allow the market through the forces of demand and supply to determine share price so as to make it more efficient.


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