Stockbroker: How to Become a Stockbroker in Nigeria

Here are all you need to know about a stockbroker and how to become one in Nigeria.

Meaning of Stock Market

This is an organized and regulated financial market where bonds, stocks and shares are bought and sold by the forces of demand and supply. A stock market is also called an equity market. Stocks, bonds, shares are also called securities or equities.

The market comprises of buyers, sellers and stockbrokers. Buyers buy securities from sellers while sellers sell their securities to buyers in the stock market. Stockbrokers act as intermediaries for buyers and sellers in the stock market.

How the Stock Market Works

The stock market has two main sections namely the primary market and the secondary market.

1.The Primary Market

In the primary market, New issues are sold through initial public offerings known as IPOs. Investment banks issue shares, stocks , equities and these are purchased by institutional investors.

2.The Secondary Market

This is where subsequent trading continues. Institutional investors and individual investors trade in the secondary market.

Stockbroker: How to Become a Stockbroker in Nigeria

What is a Stockbroker?

A stockbroker is a regulated representative of the financial market who enables the buying and selling of securities on behalf of financial institutions, investor clients, and firms. A stockbroker is also called a registered representative or a broker. The trading or purchase or sale of stocks on the national stock exchanges are usually executed through a stockbroker.

They handle transactions for both institutional and retail customers. The primary job of a stockbroker is to obtain buy and sell orders and execute them. Many market participants depend on stockbrokers’ knowledge and expertise regarding the dynamics of the market to invest in securities. A stockbroker can work either individually or with a brokerage firm. Sometimes, broker-dealers and brokerage firms are also called stockbrokers.

Different Types of Stockbroker

There are three types of stockbroker. They are full- time stockbroker, hired stockbroker and bank stockbroker.

1. Full-time Stockbroker

As the name implies, a full-time stockbroker works in a stock broking firm as a full-time time staff in a stock broking company and is paid salary at the end of the month. A full-time time stockbroker also receives commissions and percentages based on the number of successful sales made in a month.

2. Hired Stockbroker

A hired stockbroker is an individual stockbroker hired by individuals organisations and firms based on his/her excellent reputation in the stock market and having the professional expertise to manage investments and trade in equities on behalf of them.

He/She acts as an intermediary on behalf of their clients when the opportunity for trading arises. A hired stockbroker earns commissions from the sale of equities.

3. Bank Stockbroker

A bank stockbroker trades in equities on behalf of banks.

Functions of a Stockbroker

1. Buying Stocks and Other Securities on Behalf of the Client(s)

A stockbroker buys stocks and other securities on behalf of the clients. He/She buys stocks in an office or electronically by:

  • Buying them in a discretionary account
  • Buying them in an advisory account
  • Buying them in an execution account

2. Selling of Stocks and Other Securities on Behalf of the Client(s)

Like in buying, a stockbroker also sell stocks and other securities on behalf of the Client to make profit in three ways:

  • Selling them in a discretionary account
  • Selling them in an advisory account
  • Selling them in an execution account

3. Research

Stockbrokers are competent researchers. They research on the profitable investments based on accounting, economic and technical analyses of the stock exchange and financial markets.

By researching, they gain valuable insights into the stocks and securities would be profitable for their clients to trade in. This enables them to give reasonable feedback to their clients and advise them accordingly on whether to buy stocks or not, retain stock or trade them.

4.Marketing

A stockbroker is also a marketer. He/She scouts for prospective clients and keeps a list of his/ her customers. A stockbroker can also have new clients through referrals from other organisations and people.

5.Managing the Clients’ Investments

A stockbroker manages the clients’ investments by taking care of all stock exchange transactions and auditing of clients’ portfolios.

Steps on how to become a stockbroker in Nigeria:

1.Educational Qualification

A stockbroker must have a minimum qualification of first degree (B.Sc.) , HND or equivalent qualification from a reputable university or polytechnic in Nigeria. The degree or diploma must be in banking and finance, economics, accounting, business administration and insurance.

2.Registration on the CIS Website

The applicant must register as student by completing an online student registration form. After complete registration, the applicant will pay the required membership fee of #10,000 only.

3.Registration for Professional Programmes

After paying the student membership fees, the applicant can apply to register for the professional examinations which take place in March and September of every year.

4.Registration for Professional Diploma Programme

This is the basic foundation for any applicant aspiring to be a professional and certified stockbroker in Nigeria. To register for the professional diploma programme, the applicant must have five O’level credit passes in English Language, Mathematics and three other relevant subjects.

5.Uploading Relevant Credentials and Other Important Documents

The applicant must upload scanned copies of the credentials and documents on the CIS Website.

6.Registration for the CIIA Programme

CIIA stands for Certified International Investment Analyst. Applicants will pay an application fee of #75,000 to register.

Qualities of a Stockbroker

A stockbroker should possess these excellent qualities listed below

1. Trust

Trust is an important quality for any business to succeed or a by professional to excel. It is the foundation of any profession and business.

A stockbroker must not cheat and deceive clients. A stockbroker must be trustworthy. A stockbroker must have high degree of trust before he/she can be entrusted with the clients’ investments and funds.

2. Ability to Work Hard

Stock-broking is a profession that requires Handwork, patience and dedication. Handwork allows a stockbroker to get high paying deals and find credible investors.

A hardworking stockbroker gets excellent recommendations from individuals, organizations and clients. Hard presents limitless earning and business opportunities for a hard-working stockbroker.

3. Ability to Read Financial Reports

Frequent reading makes a stockbroker knowledgeable and informed about the latest trends in the financial market, national economy, profitable deals, and fluctuations in foreign exchange, unprofitable deals and fluctuations in the GDP.

Reading frequently enables a stockbroker to make excellent decisions on trading and finances. This will enable him/her to give excellent financial advice to the clients.

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