History of the Nigerian Stock Exchange

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How did the stock exchange in Nigeria start?

If you’re looking for answers to that question, then you just have to do one thing, keep reading.

In this post, we take a look at the history of the Nigerian Stock Exchange (NSE) from 1960 to date.

History of the Nigerian Stock Exchange

history of the nigerian stock exchange

On the 15th of September, 1960, the progenitor of the Nigerian Stock Exchange, the Lagos Stock Exchange was founded.

The LSE began official operations on the 25th of August 1961 with 19 securities listed for trading. Prior to this, informal operations had commenced a few months earlier in June of the same year.

The operations were initially conducted inside the Central Bank Building in Lagos Island.

At that time, the Stock Exchange had four firms as market dealers namely: Inlaks, John Holt, C.T. Bowring and ICON (Investment Company of Nigeria).

The volume for August, 1961, was estimated at £80,500 and it would later increase to £250,000. The bulk of these investments were in government securities.

In December 1977, the Lagos Stock Exchange was rechristened the Nigerian Stock Exchange and several branches were established in some of the major commercial cities of the country.

Currently, there are thirteen branches of the NSE located in the following states: Abuja, Kaduna, Port Harcourt, Kano, Onitsha, Ibadan, Yola, Benin, Uyo, Ilorin, Abeokuta, Owerri and Bauchi.

The NSE is regulated by the Securities and Exchange Commission which is involved in the surveillance of the exchange to forestall breaches of market rules as well as to detect and prevent unfair manipulations and trading practices.

Generally, the data of the listed companies on the stock exchange based on their performances are published daily, weekly, monthly, quarterly and annually.

In 1999, the NSE began operating an Automated Trading System (ATS) in which dealers through a network of computers connected to a server.

The ATS has facility for remote trading and surveillance which makes it easy for dealing members to trade online from their offices in Lagos or from any of the thirteen branches across the country

The NSE begins trading by 9.30 a.m. every business day and closes at 2.30 p.m.

In 1993, the Nigerian Capital Market was deregulated which led to prices of new issues being determined by issuing houses and stockbrokers, while the secondary market prices are made by stockbrokers only.

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As a result, the market/quote prices, along with the All-Share Index plus NSE 30 and Sector Indices, are published daily in The Stock Exchange Daily Official List, The Nigerian Stock Exchange CAPNET (an intranet facility), newspapers, and on the stock market page of the Reuters Electronic Contributor System.

Also, the Government allows foreign brokers to enlist as dealers on the NSE in order to encourage foreign investment into Nigeria. This means investors of any nationality are free to invest.

This practice isn’t unique to Nigeria only as Nigerian companies are also allowed multiple and cross border listings on foreign markets.

The NSE is a member of the World Federation of Exchanges (FIBV). The exchange is also an observer at meetings of International Organization of Securities Commissions (IOSCO), and a foundation member of the African Stock Exchanges Association (ASEA).

The NSE joined the United Nation’s Sustainable Stock Exchanges (SSE) initiative on the 31st of October 2013.

On the 7th of July, 2017, the Nigerian Stock Exchange suspended 17 companies for failure to adhere to regulatory provisions of the law on corporate governance and extant post-listing guidelines.

The suspended companies are listed below.

  1. African Alliance Insurance Plc
  2. Equity Assurance Plc
  3. Fortis Microfinance Bank Plc
  4. Guinea Insurance Plc
  5. Premier Paints Plc
  6. Resort Savings & Loans
  7. Sovereign Trust Insurance Plc
  8. African Paints (Nigeria) Plc
  9. Aso Savings & Loans Plc
  10. Ekocorp Plc
  11. Evans Medical Plc
  12. Goldlink Insurance Plc
  13. Great Nigeria Insurance Plc
  14. Omatek Ventures Plc
  15. Union Dicon Salt Plc
  16. Union Homes Savings & Loans Plc
  17. Universal Insurance Company Plc
  18. On the suspension

Over the years, the NSE has been criticized by a section of investors for stalling in punishing rogue listed companies who continue to flout listing rules, despite the obvious risk they pose to investor funds.

With the suspension of these companies, it seemed the NSE has finally listened to its critics. The suspension included the payment of fines imposed by the NSE after which the suspension was lifted.

However, companies that have their results pending before regulators will remain suspended for some time even after paying the stipulated fine.

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Another implication of this suspension is that the shares of these companies cannot be traded on the Nigerian Stock Exchange until the ban is lifted. As a result, investors that have shares and wish to sell will not be able to do so.

In April 2018, the transaction on the NSE was reviewed and it was said to have closed on a downward note as of the 25th of April, 2018.

Even the most highly capitalised stocks like Total and Dangote Cement depreciated in price, causing market capitalisation to dip by N16 billion.

At the close of trading on the 25th of April 2018, 23 stocks depreciated in price with Total emerging as the day’s highest price loser, shedding N11.20 to close at N222.60 per share.

Dangote Cement followed with N3 to close at N245 per share, as FBN Holdings lost N1.20 to close at N12.20 per share, while WAPCO depreciated by 85 kobo to close at N42.40 per share and Oando declined by 45 kobo to close at N8.70 per share.

Some of the top gainers include Nestle which topped the gainers’ chart with N74.60 kobo to close at N1568.20 per share, followed by Seplat with N27.90 to close at N765 per share.

Forte Oil gained N4.40 to close at N47.70 per share; Presco added N3.30 to close at N69.30 per share; and GlaxoSmithKline garnered 70 kobo to close at N24 per share.

Consequently, the market capitalisation of listed equities dropped by N16 billion to N14,721 trillion from N14,737 billion achieved on the 24th of April 2018.

Currently, based on the activity chart, FBN Holdings dominated in volume terms with 80 million shares worth N1.2 billion, while United Bank for Africa followed with 60 million units worth N684 million.

Fidelity Bank accounted for 40 million units valued at N101 million while companies like Access Bank traded 32 million units valued at N366 million, and Flourmills exchanged 15 million units worth N538 million.

Overall, investors exchanged 350 million shares valued at N4.6 billion in 5,020 deals as at the 25th of April.

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