How to Invest in the Nigerian Stock Exchange (2021)

One of the easiest ways to ensure the longevity of wealth is to make good long term investments that even your future generations can benefit from. This article is dedicated to how to learn the basics on how to invest in the stock exchange market. 

Shares are bought from a company’s stock in exchange for a specific percentage of ownership of that percentage of that profit depending on the value of the stock you own.

How to Buy Shares in Nigeria

The first thing you need to do is open an account with a broker. This is paramount because all your dealings in the Nigeria Stock Exchange will be conducted through your broker.

Every trader that owns a share or stock in a company can’t go to the floor of the Nigerian Stock Exchange, hence conducting trades through a registered broker is required – it’s the same in other parts of the world. When registering with a broker, you are usually required to provide some details like; a valid ID card, passport photographs, bank account details (sometimes BVN included), etc.

All in all, what you are asked to provide for registration is something you probably have before, the registration process isn’t.

With the advancement of technology, some brokering firms do not require you to visit their office for registration, you can submit the documents they need online, and start trading online through them. You can check the list of brokers registered with the NSE here.

After registering with a broker whose policy suits you, the next thing is to register on the Central Securities Clearing System (CSCS). The CSCS is an associate company of the Nigeria Stock Exchange (NSC), as such it is required your register your account before you can start trading on the NSC. Apart from just being an associate to the NSC, the CSCS is responsible for handling and settling of securities in the financial market.

After successful registration, the platform assigns you an account number which will be tiled on all your transactions on the Nigerian stock exchange. However, depending on your broker, opening an account on the CSCS platform can be done through your stock brokering firm.

How to Fund Your Account and Start Trading

The stock brokering firm you registered with provides you with account details in which you can pay into to fund your account.

For firms that support online trading, you can deposit online through their preferred channels. After the successful funding of your account, you can instruct your broker to buy or sell shares on your behalf. Giving your broker instructions to buy or sell shares on your behalf can be done in two ways:

  • Giving instructions with your registered email address.
  • By trading yourself through an online platform provided by the broker.

There are some things you need to note before you start trading. These will help you become an informed investor

  • Taxes and Transaction Fees

There are currently no taxes attached to buying and selling of shares in Nigeria. However, there is a specific fee charged anytime a transaction (either buying or selling) is executed. Fees paid to regulators like the Securities and Exchange Commission (SEC) are fixed, while fees paid to your broker varies, but usually not more than two percent of per transaction.

  • Clearing of Funds and Withdrawal 

It takes about four days for clearing and settlement of a transaction to be concluded. Profits made from shares are initially transferred to the account of your brokering firm, when you request for withdrawal it usually takes 24 hours to be completed.

Like funding your account some brokers may require an email from you before your withdrawal is paid to your account. While online brokering account can withdraw by clicking on withdrawal on their dashboard. 

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