ABSTRACT
The study is to determine the
role of the stock market in the economic development of the country through the
use of Automated Trading System (ATS), which replaced the use of Cal-over mode
on the position' of Automated Trading System which is in savings and capital
formulation.
The study employs primary and
secondary sources of data. The primary source of data was employed to elicit
information from the respondent on the concept considered. Based on this
information source, survey analysis of inferential methodology using chi-square
analysis was adopted as a method of hypotheses testing.
From the analysis of the study,
it was found out that the introduction of Automated Trading System (ATS) has
had positive impact on the development of stock exchange market in Nigeria. The
study suggested that the Nigeria Stock Exchange should be able to meet the
various international benchmarks for trading and the stock exchange should
upgrade their transaction system for proper and adequate transactions in the
market.
TABLE OF CONTENTS
CHAPTER ONE
INTRODUCTION
1.1 Background
of the study
1.2 Statement of
the Problems
1.3 Research
Questions
1.4 Objective of
the study
1.5 Statement of
hypothesis
1.6 Significance
of the study
1.7 Methodology
of study
1.8 Scope of the
study
1.9 Definition
of terms
CHAPTER
THREE
RESEARCH
METHOTODOLOGY
3.1 Introduction
3.2 Research
Design
3.3 Population
of Study
3.4 population
of study
3.5 Sample and
Sampling procedures
3.6 Research
Instrument
3.7 Validation
of Research Instrument
3.8 Reliability
Test
3.9 Method of
Data Analysis
CHAPTER FOUR
DATA
ANALYSIS AND INTERPRETATION OF RESULTS
4.0 Introduction
4.1 Administration
of Questionnaires
4.2 Demographic
Characteristic of Samples
4.3 Hypothesis
Testing and Interpretation
CHAPTER FIVE
SUMMARY,
CONCLUSION AND RECOMMENDATIONS
5.1 Summary
5.2 Conclusion
5.3 Recommendation
Bibliography
CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
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.
Therefore, the translation of
the ATS was dined with a view to enhance the role of the stock market in the
economic development of the country. There is no doubt that the benefit of an
Automated Trading System will engender resources to the stock markets, with
positive implication for savings and capital formation in the economy.
Also, the A TS, as an upgrade
of NSE Trading System, has placed the stock exchange on equal pedestal with
many emerging markets, thereby enhancing competitive position among the world
stock exchange. This led to the research work "The Impact of Automated
Trading on Nigerian Stock Exchange".
1.2 STATEMENT OF THE PROBLEM
This study will be concerned
with the impacts of automated trading system on the Nigerian Stock Exchange.
Trading on the Nigerian Stock Exchange is automated. At the moment, brokers
come to the trading floor under their or chess, but arrangements have commercial
for remote trading, whereas brokers can trade electronically from their offices
in any part of the country. Automated Trading System has facility for remote
trading and surveillance and there is not perfection in this method of trading.
These imperfections include:
i.
Poor network
connection
ii.
Use of out dated
computers
iii.
Inefficiency of
control server
iv. Inefficiency of brokers to handle the
electronic computer
v. Capital gains cannot be easily exploited
vi. Inability to accelerate resolution of disputes among operation
vii. Investor's
confidence has been engendered by the trading system.
viii. There has
been numerous complaint-failed transitions system.
1.3 RESEARCH
QUESTIONS
1.
What are the
effects of Automated Trading system in the Nigerian Stock Exchange?
2.
What roles Automated Trading System play on the Nigerian
Stock Exchange?
3.
What is the Difference between Automated Trading system
and call over Trading System?
4.
What
are the benefits and shortcomings of Automated Trading System on the Nigerian
Stock Exchange?
5.
Have investors and
corporate organizations maximize the benefits derivable from Automated Trading
System?
6.
Has
Automated Trading System bring about transparences among the market operations?
7.
What is
transactions cost of Automated Trading System in the country.
8.
Are these readily
available investors for the product traded in the Automated Trading System?
1.4 OBJECTIVES OF
THE STUDY
This study is set to achieve
the following objectives:
§ To determine price stability and transparency on the
automated trading system
§ To examine the trading activities of members of the stock
exchange for their mutual advantage and for the benefits of this clients.
§ To examine the globalization of the Nigeria capital
market.
§ To better relationship between investors and the
generation in the market.
§ To find facility for remote trading and surveillance. .
§ To examine credibility in transparency a timeliness of
transactions.
1.5 STATEMENT
OF HYPOTHESIS
The hypothesis of this study
involves both the null hypothesis and alternative hypothesis.
Ho: Automated Trading System had no effect on the
Nigerian Stock Exchange.
H1: Automated Trading system has impact on the Nigerian Stock
Exchange.
1.6 SIGNIFICANCE
OF THE STUDY
This study will justify the
operations of the Automated Trading System by promoting a vigorous and healthy
private sector within the economy in promoting private sector developments,
financial policies and sound macroeconomic policies are adopted.
The research work will bring in
companies to list on the stock exchange and to sell an adequate proportion of
this equity to the public. Also, the application of A TS will bring about
effective system to intermediate between brokers, dealers, merchants or
investment banks and underwriter.
1.7 METHODOLOGY OF STUDY
The methodology that was
adopted during the research work includes: the use of primary method of data
collection and secondary data would be used. The primary data used involved
oral interviews as well as questionnaire and secondary data involves the used documented
records, journal, textbooks, publications and unpublished articles, and the
source of data collection will, be through the use of a well standard
questionnaire will be adopted extensively during the course of this research
project. The hypotheses were tested using the chi-square (X2)
method.
1.8 SCOPE OF THE
STUDY
The study covers to a good
extent the impacts of ATS on the Nigeria Stock Exchange, putting into
consideration the various financial policies. It will also reveal within its
framework, the various financial policies innovation in what has helped in
boosting globalization and improving the performance of the industry in
general.
The scope of study therefore IS limited to component enhancing
globalize/automated system in the world in general using various instruments
available in the industry
1.9 DEFINITIONS OF TERMS
Automated Trading System: It is
a security arrangement whereby transaction on the stock exchange is achieved
through a network of computer.
Software Horizon: The horizon
is a trusted security trading solution, which has been deployed in developed
and emerging stock market pre-open and close state ATS.
The Pre-Open State: Is when
system, the orchess for buys and sells on their systems. The orchess are not
matched and brokers can change all or aspect of the orchess,
The Open State: Is when trading
engine (the computer service) generates by opening and matches the orchess,
followed by continuous trading. The CLOSE STATE is when the market prices close
and trading is halted till the next day.
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