Step by Step Process of Investing in the Nigerian Stock Exchange

Read this if you want to know the exact process of investing in the NSE.

If you’re reading this, it means you are ready. You have heard about all the possibilities that come with investing in the stock market and have probably even fantasized about having money work for you while you continue your life unbridled.

You have also learnt some of the tips that could make you a professional in the stock investing game. The potential of the Nigerian stock market is huge and it is no surprise why international investors are swarming in to invest.

If you use the Yochaa App frequently (you really should download it right now if you don’t have it), this potential wouldn’t be new to you. It is time to part ways with your money and set off on this amazing journey! Here are the steps to follow:

Step 1: Open A Brokerage Account:

To open a brokerage account, simply sign up with any of the approved stock broking firms in Nigeria. Chances are that you have one or two broker friends who would be willing to get you on board.

If not, a simple Google search will provide you with a list of options. You can also use an online trading platform and apply online without having to physically meet a broker.

The application would usually require you to reveal a few personal details ranging from your bank account details, BVN number, means of identification and the usual.

It typically doesn’t take up to 24 hours for the account to be opened. It is also advisable that you have a Central Securities Clearing System (CSCS) account. The CSCS operates a computerized depository, clearing, settlement and delivery system for transactions in securities in the Nigerian Capital Market.

As such, it serves as a backup way to viewing your portfolio without the help of your stockbrokers. It also helps mitigate risks of fraud.

“To purchase securities in the primary or secondary market, an investor must appoint a securities dealer/stockbroker who is a registered Dealing Member of NSE to facilitate account opening and trading.” – The Nigerian Stock Exchange

Step 2: Trade With Your Stock Broking Account:

By signing up under a brokerage firm, you have appointed a registered dealer or stockbroker to trade on your behalf. They would help you open a stockbroking account and you will be given a unique Clearing House Number (CHN).

To begin trading, simply deposit money with your stockbroker and ask them to trade on your behalf. You simply tell them how many units of shares in a company you want to get and they facilitate it for you.

Where you are using an online stock trading platform, you simply fund the account and buy the shares yourself online. Minimal fees are applied for both the online and physical trading process.

Step 3: Post Trading:

It typically takes a few days (about 4 days) before the entire transaction is finalized. The Nigerian Stock Exchange has clearing and settlement at T+3 (trade date plus three days).

After you make sales, the money received remains in the account of the broker until you request for a withdrawal which generally takes within 24 hours to be completed. The funds will be paid to your registered bank account.

It’s that simple.

The next few posts will give you further insights into the Nigerian Stock Market and guide your journey to quality investing and wealth creation.

Written by Lawretta Egba.