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Oct 03, 2018

Nigeria was 58 years on Monday. Nigerians have been taking stock of the achievements recorded by the country over the years. A review of the economic sector showed a mixed bag of the good, bad and ugly. And the capital market, which is used to measure the performance of the economy, has recorded mixed fortunes in line with the general trend posted by the economy.

Coincidently, the establishment of the stock market began the same year Nigeria got its independence. The founding fathers of the capital markets signed Memorandum and Articles of Association that established the then Lagos Stock Exchange (LSE) in 1960. Those who signed the initial Memorandum and Articles of Association were Sir Odumegwu Ojukwu, Akintola Williams, C.T Bowring and John Holt Investment Company. The Exchange began operations as a private company limited by shares. But formal trading did not commence on June 5, 1961. After existing as the LSE for about 17 years, the exchange was renamed Nigerian Stock Exchange (NSE) in December 1977 and re-incorporated as a company limited by guarantee in December 1990. As a limited by guarantee not-for-profit organisation, the NSE thrives on the goodwill, reputation and integrity of its members.

 The Early Days
The Nigerian stock market started operations with only four stocks, which were the Nigerian Tobacco Company (now British American Tobacco), John Holt Investment Company Limited Company (ordinary stock) John Holt Investment Company (preference stock) and the Nigerian Cement Limited. And for many years, the call-over system was used for trading. At the initial stages of the call over system, a clerk used a white chalk to indicate buyer and seller position. However, as more securities got listed and more operators entered the market, the system changed from a black board to a round table. Under the round table call-over method, a call over clerk would shout out and match bidding and selling orders.

However, the market represented by the NSE has undergone what historians call renaissance in the last 58 years in the legal structure, trading system, clearing, settlement and delivery, system, quantum of listed companies and securities, corporate governance and upward trend in deployment of Information and Communication Technology (ICT).

The exchange at inception was operating like a silo under the obnoxious Exchange Control Act of 1962 which was later repealed and replaced with investor-friendly Acts that opened the market to the international community.
It was a turning point in 1997, when the market joined the global trend by transiting from manual clearing, delivery and settlement system to electronic one with the commencement of its central depository called Central Securities Clearing System (CSCS).

In 1999, the exchange also transited from manual system of trading called Open Outcry or Call-Over or Pit Trading to the Automated Trading System (ATS), the use of computers to execute transactions on the market. The initial manual trading system is the use of shouts and signals to convey trading information of bid and offer on the floor.
The exchange was highly instrumental to the success of the first phase of privatisation programme of the federal government. Besides, many States and Local Government Councils had at different periods utilised the market to mobilise long-term fund to execute landmark development projects.