How Information Technology Has Transformed the Operations of the Nigerian Stock Exchange

The Nigerian stock exchange NSE, also known as the Nigerian capital market has experienced a very robust growth in the last decade, in terms of activities, transaction types, volume and value of trade, number of listed companies and number of capital market operators. It has also witnessed a growing governmental presence in the area of bond issuance to finance development projects. The stock exchange is one of the most profitable ventures for wealth creation in Nigeria today. However, this was not the case in the previous decades when it was a case of delayed transactions coupled with bureaucratic modes of operations that had to be tolerated by Nigerian investors.

Information technology can be said to be the Messiah of the NSE because it has helped to curb a lot of fraudulent schemes from dubious stock brokerages and issuing houses as well as providing a transparent and more efficient mode of operation for this gold mining sector. This Messianic effect can be seen from the changes that have occurred in the recent past.

First, it was the introduction of the Central Securities Clearing System (CSCS). This is a subsidiary of the NSE that monitors the activities of the exchange in a computer based environment by serving as an intermediary to all transactions thereby providing a fair trading system for all investors. However, the NSE invested heavily in launching the Automatic Trading System (ATS). This system allows for automation of the capital market operations. As a result of this initiative, the transaction period was drastically reduced from an average of three months or more to a trading day plus three other working days.

After the automation of the stock exchange floor, the Securities Exchange Commission launched the implementation of the e-bonus, e-dividend, e-allotment and e-IPO.

The emergence of GSM operators did not only ease communication and provided job opportunities, it also had a great effect on the markets credibility, in the year 2006, a phone based alert program was introduced. This in turn increased the investors trust in the Nigerian capital market transactions.

The impact of Information Technology on the capital market would not be complete without a mention of the internet boom as communication with stockbrokers and shareholders have improved so also information like market capitalization, all share index, value and volume of stock traded, bulls and bears, are all available.