SS3 First Term Commerce Lesson Note – History of the Nigerian Capital Market

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WEEK 6

CLASS: SSS3

TOPIC: HISTORY OF THE NIGERIAN CAPITAL MARKET

CONTENT:

1. Historical development 1946: development of loan stock
2. 1960 Lagos stock exchange act
3. 1962 capital issue committee
4. 1979 security exchange commission
5. 1985 second tier security market
6. 1999 investment and security act

DEFINITION OF CAPITAL MARKET:

The Capital market is a financial market where medium- and long-term funds for industrial development are mobilized and traded. The traders (players) in this market are known as operators. The operators act as intermediaries between the fund raisers and fund users (buyers).

EXAMPLES OF OPERATORS

These include: Securities Exchanges, Brokers, Dealers, Issuing Houses, Registrars and Insurance Advisors.

HISTORICAL DEVELOPMENT OF CAPITAL MARKET:

DEVELOPMENT OF LOAN STOCK 1946:

The origins of Nigerians Capital Market date back to colonial times when the British Government ruling Nigeria at that time sought for funds for running the local administration. Most of these funds are derived from agriculture, produce marketing and solid mineral mining. Discovering that these sources were inadequate to meet its growing financial obligation, the colonial administration decided to expand its revenue base by reforming the system of revenue mobilization, taxation and other payments. This was achieved in 1946 with the issuance of Nigeria’s first development loan stock. The Nigerian Capital Market was born in 1946.

 1960 LAGOS STOCK EXCHANGE ACT:

The development loan stock achieved maturity with the establishment of the IAGOS STOCK EXCHANGE in 1960. On September 15, 1960, the Lagos Stock Exchange was incorporated as a private limited liability company, limited by guarantee under the provisions of the Lagos Stock Exchange.

1962 CAPITAL ISSUE COMMITTEE:

In order to mobilize funds for economic development, a capital issue committee was established in s1962 and upgraded to Capital Issue Commission in 1979.

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