Full Project – Online automated stock exchange system – case study of Nigeria stock exchange, Lagos, Nigeria

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CHAPTER ONE

INTRODUCTION

1.1 INTRODUCTION

Automated Stock exchange system is an Organized and regulated financial market where securities (bonds, notes, shares) are bought and sold at prices governed by the forces of demand and supply. Stock exchanges basically serve as primary markets where corporations, governments, municipalities, and other incorporated bodies can raise capital by channeling savings of the investors into productive ventures; and secondary markets where investors can sell their securities to other investors for cash, thus reducing the risk of investment and maintaining liquidity in the system. Stock exchanges may also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and dividends.

It is system design for stockholder or shareholder which legally enables them to own a share of stock in a public or private corporation. Shareholders are the owners of a limited company. They buy shares which represent part ownership of a company. Stockholders or shareholders are considered by some to be a subset of stakeholders, which may include anyone who has a direct or indirect interest in the business entity. Trade is restricted to brokers who are members of the exchange and are fully registered.

The automated system is only used in the stock market. A stock market or equity market is the aggregation of buyers and sellers (a loose network of economic transactions, not a physical facility or discrete entity) of stocks (also called shares); these may include securities listed on a stock exchange as well as those only traded privately.

The system creates orders and automatically submits them to a market center or exchange, it is restricted to only shareholder or stockholder which is registered and is license to trade in the stock market. Any registered member is capable of buying stock or share from any company of this choice by going through the company statistical market data in other to know if the company he or she is about to buy stock from is a company that is growing with the economy or is falling from the competitive market of its area.

Automated stock exchange systems are often used with electronic trading in automated market centers, including electronic communication networks, “dark pools”, and automated exchanges. Automated stock exchange systems and electronic trading platforms can execute repetitive tasks at speeds with orders of magnitude greater than any human equivalent.

1.2 BACKGROUND OF THE STUDY

The Nigerian Stock Exchange was founded in 1960 as the Lagos Stock Exchange. It started operations in Lagos in 1961 with 19 securities listed for trading. In December 1977 it became known as The Nigerian Stock Exchange, with branches established in some of the major commercial cities of the country.

The NSE is regulated by the Securities and Exchange Commission, which has the mandate of Surveillance over the exchange to forestall breaches of market rules and to deter and detect unfair manipulations and trading practices. The Exchange has an automated trading System. Data on listed companies’ performances are published daily, weekly, monthly, quarterly and annually.

The Nigerian Stock Exchange has been operating an Automated Trading System (ATS) since April 27, 1999, with dealers trading through a network of computers connected to a server. The ATS has facility for remote trading and surveillance. Consequently, many of the dealing members trade online from their offices in Lagos and from all the thirteen branches across the country. The exchange is in the process of establishing more branches for online real time trading. Trading on The Exchange starts at 9.30 a.m. every business day and closes at 2.30 p.m.

In order to encourage foreign investment into Nigeria, the government has abolished legislation preventing the flow of foreign capital into the country. This has allowed foreign brokers to enlist as dealers on the Nigerian Stock Exchange, and investors of any nationality are free to invest. Nigerian companies are also allowed multiple and cross border listings on foreign markets.

1.3 STATEMENT OF THE PROBLEM

The number of challenges encountered in stock exchange system over the period of the recent boom in the stock market business. There challenges are stated as follows:

Customers complain regularly about their dissatisfactions due to service delay.
Records of pervious stock are regularly misplaced due to poor documentation
The level of stock order form shareholder on daily basis outweighs the available manpower services and thus adds heavy workload on the employees.
As industries are fast expanding, people are seeking for more ways to purchase stocks with much ease and still maintain cost effectives.

1.4 OBJECTIVE OF STUDY

The aim of the study is to develop software that will have the following features:

The system will have interactive menu on the home page of the website
Shareholder or stockholder to be enables to buy stock.
To enable company raise capital for their business
The stocks are represented by their company name on the menu

1.5 SCOPE OF THE STUDY

This project covers the design and implementation of a website that will allow shareholders to go online and buy or sale their stocks to any available buyer around Nigeria. The following things are also discussed and what the software would handle.

About the Nigeria stock exchange market.
The stock market and the services offered there.
Online purchase

1.6 SIGNIFICANCE OF THE STUDY

In view the rapid development of the computer technology in almost all fields of operation and its use in relation to information management. It has become important to look into the development of online stock purchasing system for firms to meet up with demands of the customers.

Therefore, the stock exchange software has the following advantages:

Advertise available stock.
Reduce time wasted in data processing.
Keep accurate record on purchased stock.
Reduce the workload in the present system.
Create a platform for online purchase of stock

1.7 LIMITATION OF THE STUDY

The following are the limitations of the research work:

Lack of power supply
The cost of paying for computer hour
Insufficient library materials for the research work
Insufficient sensitive from information form the case study

1.8 DEFINITION OF TERM

In order to put the message across all my readers, some terms and concepts has to be defined.

ATS: Automated Trading System
FEM: Foreign Exchange Market
NSE: the Nigeria stock exchange
STOCKHOLDER OR SHAREHOLDER: any person, company or other institution that owns at least one share of a company’s stock.
STOCK MARKET: The market in which shares of publicly held companies are issued and traded either through exchanges or over-the-counter markets.
TECHOLOGY: It is the study of techniques or process of mobilizing resources (such as information) for accomplishing objectives that benefit man his environment.
STOCK: The goods or merchandise kept on the premises of a shop or warehouse and available for sale or distribution.
INVESTORS: Is a person who allocates capitals with the expectation of a future financial return.
BONDS: A bond is a debt investment in which an investor loans money to an entity for a defined period of time at a variable or fixed interest rate.
CAPITAL: Wealth in form of money own by a person or organization or available for purpose such as starting a company or investing.

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