Demystifying Capital and Money Markets in Nigeria

The financial market in Nigeria is broadly divided into the money market and the capital market. The money market offers short-term monetary or financial instruments such as treasury bills and fixed deposits that last from a month to a full year. The capital market on the other hand offers long-term financial instruments that go over one year with instruments such as equity and bonds among others.

The central bank of Nigeria, commercial and merchant banks, as well as discount houses offer short term instruments in the money market; but the security and exchange commission, the Nigeria stock exchange, and issuing houses or stockbrokers provide instruments for the capital market.

Capital and Money Markets in Nigeria

The money market is composed of the primary and secondary segments of the market and these work for the financing or refinancing corporations to manage public debt, development and policy issues. Consultants and market operators work within these sectors to make things work for corporations seeking financing objectives.

To this end, the security and exchange commission must duly register market operators and other professionals dealing with securities in deference to the Investment and Securities Act of 1999. The SEC will outline procedures in which capital market operators are to handle security transactions in reference to the certificate of registration issued to operators.

The SEC regulates investment and security transactions in Nigeria and is the apex regulatory body for the capital market in the country, just the way the central bank manages financial banks through the money market.

To trade shares or securities in the capital market, you need the expertise of stockbrokers who happen to be your agent on the floor of the exchange and get paid commissions for their trading and advisory services.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.