GLOSSARY

WHAT IS THE CENTRAL SECURITIES CLEARING SYSTEMS (CSCS) LIMITED?

This is one of the major outcomes of automated (computerized) trading.

The Central Securities Clearing System (CSCS) operates a computerized clearing, settlement and delivery system for transaction in securities listed on The Nigerian Stock Exchange. It is the central depository for share certificates of companies listed on The Nigerian Stock Exchange.

This feature has not only significantly enhanced the speed of buying and selling shares for investors, but also provides all investors a CSCS number (similar to a bank account number) which enables any investor to independently access any information regarding his investment directly from the NSE without necessary going through his/her stockbroker. This further enhances transparency.

• A specialised market where shares are bought and sold
• A market where long terms funds are sourced through Equities and Debt Instruments.
  These instruments are subsequently traded openly in a Stock Exchange.
  
  Instrument Traded: Shares (Equity Ownership Interest in a business)
  • Bonds
  • Industrial Loans
  • Derivatives (Rights Issue)

• It is often used synonymously with the Capital Market.
• It provides means by which individuals and institutions can own and partake in the life of businesses.
  
  Why Need a Stock Exchange?

A stock exchange is the place where companies can raise money to make their businesses bigger and better. Companies raise this money by selling shares or stocks to investors. At the same time, the stock exchange gives investors an opportunity to invest in these companies and benefit from any profits they may make. Government can also raise money from stock exchange especially through sale of development stocks, bonds etc.

The words shares or stocks are often used interchangeably.

A share is what one has to own to become a member of a company. When you buy a share in a company you become a member of the company. Being a member or shareholder means that you share in the profit or loss of the company.

Companies issue shares. These shares stand for the money which shareholders (who are the members of the company) put down when they first invested in the company.

Owners of shares (shareholders) are presumed to own the company. If the company makes a profit, the shareholders have the right to a share of the profit, which is declared for distribution. We call such a slice of the profit a dividend. Shares in listed companies are traded on The NSE on every working day of year.