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THE IMPACT OF AUTOMATED SYSTEM ON NIGERIAN STOCK EXCHANGE
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
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
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
DATA ANALYSIS AND INTERPRETATION OF RESULTS
4.1 Administration of Questionnaires
4.2 Demographic Characteristic of Samples
4.3 Hypothesis Testing and Interpretation
SUMMARY, CONCLUSION AND RECOMMENDATIONS
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.