www.covenantuniversity.edu.

ng

Raising a new Generation of Leaders

THE ROLES AND ACTIVITIES OF

PARTICIPANTS IN THE CAPITAL
MARKET; FUNCTIONS AND DUTIES.
Dr. (Mrs.) Adegboye F.B.
Banking & Finance Dept.
Introduction
• Capital market is a financial market that provides facilities
for mobilizing and dealings in medium and long-term
funds.
• Participants in the stock market are Securities Exchanges,
Brokers/Dealers, Issuing Houses, Registrars and
Investment Advisers.
• The Nigerian Capital Market plays the unique role of making
funds available for economic development and growth.
• A detailed review of the Nigerian Capital Market was carried
out in 1996. This led to the enactment of the Investment
and Securities Act (ISA) No. 45 of 1999.

2
 Market Operators
• Broker/dealers
• Issuing house
• Investment adviser
• Registrar
• Underwriters
• Trustees
• Portfolio/fund managers
3
Functions/Responsibilities of Brokers and Dealers
 Purchase / disposal of securities on behalf of himself or
clients.
 Trading on registered securities Exchange.
 A broker/dealer in the discharge of his function must not allow
its indebtedness to exceed 200 percent of his net capital.
 A broker/dealer is enjoined to keep separate account of his
client and maintain proper and adequate record of his
transaction on behalf of his client.
 A broker / dealer is prohibited to solicit deposits through
brochures, salesmen.

4
 Contd.
• Introduction of primary market security.
• Gives investment advisory services
• Portfolio/fund management
• Credit advancement to their clients and charging interest.
• Underwriting
• Development of new product and technique
• Monitoring of closure of register
• Dispatch of relevant document to clients and other parties.
• Delivery of proceed of sale of security to transferor
• Delivery of certificates to transferees of securities where applicable
• Effective regular interaction with relevant functionaries

5
 Acid Test for Appointment of Brokers and Dealers.

• Registration with appropriate authority

• Commission/Margin should be moderate
• Financial Status –
- Adequacy of capital base
 Adequacy of asset base
 Liquidity
 Ability to provide bridging finance
 Ability to take deferred payment

6
 Contd.
 Ability to underwrite singly or arrange a consortium to
underwrite
 Ability to honour its obligation as at when due.
 Disposition to deliver, on time, the proceeds.
• Experience.
• Goodwill.
- Is the broker/dealer known in the industry.

7
 Functions & Responsibilities of Issuing Houses
• Acting as agent of issuer for purpose of primary
issues
• Coordinating activities of other professionals
and parties to an issue
• Preparing registration statement, prospectus
and other offer documents.
• It offers professional advice.
• Sourcing of capital through loan syndication,
issue of securities, & debt conversion.
8
 Contd.
• Fund Management.
• Project Finance
• Packaging/Floatation of An Issue
• Marketing Securities
• Underwriting of issues
• Financial intermediation

9
Functions of Investment Advisers
 Financial investment advisory services;
 Making recommendation as to type of securities to buy or sell
 Provision of information or report regularly to clients on
developments in the security market
 Publication of financial market periodicals.
 Provision of consultancy services
 Evaluation of various securities to determine their investment
qualities.

10
Functions of Registrars
 Opening a register of members or bond holder at the
conclusion of initial or subsequent offers.
 Maintenance of register of members.
 Effecting transfer of securities when there is need for.
 Acceptance of lodgment of documents in respect of
concluded transactions or gifts.
 Preparation of new certificates for directors/company
secretary’s signature in respect of new purchases.

11
Contd.
 Dispatch of annual report and account to
members of companies.
 Dispatch of dividend warrants to ordinary
shareholders.
 Collation of return in respect of public offers
 Direct linkage with the clearing corporations or
company.

12
Classes Of Underwriting Identified In The Nigerian Capital
Market
 Best effort.
 Stand-by.
 Firm underwriting.

13
 Trustees
• A trustee holds and manages properties or assets for
the benefit of other person or institution (Beneficiary)
• A trustee protects the interest of investor.
• The specific function could be on debenture, a unit
trust scheme, real estate etc.

14
 Portfolio/Fund Manager
• Corporate body that receives fund from investors of
fund
• Manage such funds in terms of investing the fund
• Investment inline with approved portfolio mix and
investment objective and policies.

15
Thank You for your
Attention

16