1.1 Background of the Study

In 1977 it became The Nigerian Stock Exchange, with branches established in some of the major commercial cities of the country with Lagos as the head office of the Nigerian Exchange and  an office  in Abuja. The Exchange started operations in 1961 with 19 securities listed for trading. Today there are 262 securities listed on The Exchange, made up of 11 Government Stocks, 49 Industrial Loan (Debenture/Preference) Stocks and 194 Equity / Ordinary Shares of Companies, all with a total market capitalization of approximately N287.0 billion, as at August 31, 1999. Presently, there are 139 listed equities while the all-share index and market capitalisation stood at 24, 807 basis points and 1.973 trillion respectively as at December 3, 2010 (Nigerian Stock Exchange Equities Summary. Most of the listed companies have foreign/multinational affiliations and represent a cross-section the economy, ranging from agriculture through manufacturing to services.  The market has in place a tested network of Stockbrokerage Firms, Issuing Houses (Merchant Banks), practicing corporate law firms and over 50 quality firms of auditors and reporting accountants (most with international links). The Stock Exchange and most of the nation’s stock broking firms and issuing houses are staffed with creative financial engineers that can compete anywhere in the World. Therefore, the market has in place a network of intermediating organizations that can effectively and creditably meet the challenges and growing needs of investors in Nigerian. Integrity is the watchword of The Stock Exchange. Market operators subscribe to the code “Our word is our bond”. Thus, public trust in the Nigerian stock market has grown tremendously, with about three million individual investors and hundreds of institutional investors (including foreigners who own about 47% of the quoted companies) using the facilities of The Exchange. However, the aftermath of the global financial meltdown has greatly affected the confidence level of investors. In the interim, the stakeholders are making frantic efforts to return the Exchange to an enviable position.

The management of the Nigeria Stock Exchange after careful and critical reviews its services; identified some difficulties in the flow of transaction between the exchange stock brokers, registrars and the investing public. In order to remove the individual bottleneck in the transaction flow, the exchange revolved the idea of establishing an independent corporate entity that would be dedicated to improve substantially the flow of information and transaction with regards to clearing and settlement in the market, so as to enhance the efficiency of the range of services derived to investors. This resulted in the setting up of the Central Security Clearing System (CSCS) as the clearing House of the Nigeria Stock Exchange in April 1997. Since the emergence of the Central Security Clearing system, these has been an exchange from the manual call over trading system to the Automated Trading System (ATS) the transaction which was made on April 27, 1999, was at once a progression on the CSCS and a response to developments of the exchange operating environment in getting set for the global capital market today. Too much attention cannot be paid to technology. Technology, as facilitator of high-quality service delivery has transformed markets around the world and these markets now compete in the basis of efficiency and spend of executing should the market not meet an efficient standard, the capital meant for it will be invariably invested elsewhere possibly resulting in net profit outflow. In the case of Nigeria, as newly liberalized market, the capital inflow may be less than optimal, if effort is not made to enhance the speed and efficiency of Nigerian Stock Exchange.