FREQUENTLY ASKED QUESTIONS

• Who is FSDH Securities?
• What is the relationship between FSDH Securities and FSDH?
• What makes FSDH Securities stand out amongst its peers?
• What products/ services do FSDH Securities offer?
• What is a Stock Exchange?
• What are shares, stocks and bonds?
• How do I invest in the Nigerian Stock Market?
• What are the charges for buying and selling shares in the Nigerian Stock Market?
• What are the returns from investing in shares?
• What is the ATS?
• What is the CSCS?
• What is dematerialization?
• What is demobilization?

 

 

1. Who is FSDH Securities?

FSDH Securities Limited (formerly Counters Trust Securities Limited - CTSL) is a Dealing Member of The Nigerian Stock Exchange and is registered with the Securities & Exchange Commission as a Broker / Dealer, Issuing House, Portfolio Manager, and Investment Adviser. The Company was formed in July 1995 to provide stock broking, dealing services, financial advisory, issuing house, portfolio management amongst other services relating to the capital market. FSDH Securities has a paid-up share capital of N60 million and an authorized share capital of N60 million. Over the last six years, FSDH Securities has firmly established itself as one of the major players in the stock market; providing high quality services to individual and institutional clients by upholding the highest standard of business ethics, integrity and professionalism.

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2. What is the relationship between FSDH Securities and FSDH?

First Securities Discount House (FSDH), the largest and most profitable discount house in Nigeria, was very instrumental to the establishment of FSDH Securities. Following its incorporation, FSDH Securities entered into a technical services agreement with FSDH under which FSDH provides FSDH Securities with technical, operational, financial, research and managerial support.

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3. What makes FSDH Securities stand out amongst its peers?

FSDH Securities was set up to bolster the range, depth, expertise and quality of service currently available in the Nigerian capital market. This it does by:

 

(a) Offering its clients professional investment advice based on the experience of its staff in the capital market and rigorous in-house research and analysis.

 

(b) Making use of the latest technology available to enhance response time and ensure a service delivery that is of a very high standard.

 

(c) Offering new products and services tailored to suit the investment requirements of an increasingly sophisticated investing public.

 

(d) Actively trading in securities in the secondary market (i.e. equity and debt instruments) and providing easy entry and exit for both local and foreign portfolio investors desiring to participate in stock market activities.

 

(e) Upholding the highest standards of business ethics, integrity and professionalism

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4. What products/ services do FSDH Securities offer?

Our services are as follows:

 

1. Dealing Service.

2. Portfolio Management Service.

3. Nominee and Custodial Services.

4. Stockbroker to Primary Market Issues.

5. Stock Market Advisory Services.

6. Receiving Stockbroker to New Primary Market Issues.

7. Financial Advisory/Issuing House Services.

 

As part of these services, we have designed the following products for investors in the stock market:

 

1. PERSONAL EQUITY PLAN [C-PEP]

The FSDH Securities Personal Equity Plan [C-PEP] is designed to help the discerning investors create and maximize their wealth.

2. FSDH Securities FAMILY EQUITY PLAN [C-FEP]

The FSDH Securities Family Equity Plan is designed to help parents create and build up wealth for future use by the family.

 

3. FSDH Securities BULL ACCOUNT

The FSDH Securities Bull Account [C-B Account] is designed solely for High net worth individuals and institutions.

 

FAQ’S ABOUT THE STOCK MARKET

 

1. What is a Stock Exchange?

A Stock Exchange is an organized market for the trade of securities, i.e. shares (or equities), government and corporate bonds, and their derivatives. In Nigeria, there are two stock exchanges recognized by the Securities and Exchange Commission. They are The Nigerian Stock Exchange and the Abuja Stock Exchange.

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2. What are shares, stocks and bonds?

Shares or stocks represent ownership rights in companies where they are used to represent ownership. In other words, those who own the shares of a company own the company. Depending on the nature of the company, the owners of share accept limited or unlimited liability for losses borne by a company. In the case of a limited liability company, the liability of shareholders is limited to the contribution made when purchasing the shares. On the other hand, in the case of an unlimited liability company, the liability of shareholders to cover the losses of a company is not limited to the contribution made by shareholders via the purchase of the shares held. In this case, liability extends to the personal property of shareholders. Likewise, shareholders own all excess profits made by a company after obligations such as corporate tax and loan obligations have been serviced. It is important to note that all companies listed on the stock exchange are limited liability companies.

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3. How do I invest in the Nigerian Stock Market?

Opportunities to buy shares exist via two broad channels, i.e., by;

a. Investing through public or private offers of new or existing shares- Several quoted and unquoted companies as well as the different tiers of government offer shares or stocks to the public to fund development and other projects. In the case of public offers, the securities are advertised in the print and/or electronic media and application forms are made available with stockbrokers, such as FSDH Securities , banks and other avenues. In the case of private offers, the shares are not advertised to the general public but are offered to a selected number of prospective investors. Investors subscribe to these offers by filling out an application form and attaching payment for the securities they wish to purchase. Subsequently, the issuing house to the public or private issue of the security processes all applications and allots shares to subscribers in accordance with agreed criteria. Certificates are then sent to successful subscribers and serve as evidence of ownership. Shareholders may trade these certificates in the future. Meanwhile, cheques for the amount paid for subscriptions are mailed to unsuccessful subscribers.

b. Buying securities on the Stock Exchange - Investors may purchase shares on any of the two stock exchanges recognized by the Securities and Exchange Commission, i.e., the Nigerian Stock Exchange and the Abuja Stock Exchange. Investors can only buy shares through agents called stockbrokers, such as FSDH Securities . Investors are advised to contact stockbrokers who would provide the necessary documents to open an account with the Central Depository. Subsequently, investors should discuss their orders with the stockbroker who would then purchase the shares.

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4. What are the charges for buying and selling shares in the Nigerian Stock Market?

The following are the statutory charges for the purchase and sale of shares on The Nigerian Stock Exchange:

Purchases

 

	RATES	VAT	TOTAL
Brokers Commission	1.5% of Consideration	5% of Brokers Commission (or 0.075% of Consideration)	1.575% of Consideration
SEC Fees	0.6% of Consideration	Nil	0.6% of Consideration
CSCS Fees	0.1% of Consideration	5% of CSCS Fee (or 0.005% of Consideration)	0.105% of Consideration
Stamp Duties	0.075% of Consideration	Nil	0.075% of Consideration
TOTAL			2.355%

Sale

 

	RATES	VAT	TOTAL
Brokers Commission	1.5% of Consideration	5% of Brokers Commission (or 0.075% of Consideration)	1.575% of Consideration
NSE Fees	0.5% of Consideration	5% of NSE Fee (or 0.025% of Consideration)	0.525% of Consideration
CSCS Fees	0.45% of Consideration	5% of CSCS Fee (or 0.0225% of Consideration)	0.4725% of Consideration
Stamp Duties	0.075% of Consideration	Nil	0.075% of Consideration
TOTAL			2.6475%

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5. What are the returns from investing in shares?

Returns from investing in shares are:

a. Cash Dividends - This refers to periodic payments made by the companies to their shareholders, usually at the end of the companies’ financial year. The payments are made to all shareholders listed in the companies’ register of members as at a particular date called the company’s closure date. However, it is important to note that the stock exchange adjusts the share price of the company for this payment. For instance, if a company declares a dividend of N0.50 per share, the company's share price would be adjusted downwards by N0.50 on the company’s closure date.

b. Bonus/Scrip Shares - This refers to the issue of new shares by companies by the conversion of a portion of their capital and/or revenue reserves to shares. The new shares are then distributed amongst shareholders who are listed in the company’s register of shareholders as at a particular date known as the company's closure date.

c. Capital Gains - This refers to the appreciation in a company’s share price on the stock exchange.

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6. What is the ATS?

The ATS refers to the automated trading system of The Nigerian Stock Exchange. The system became operational in April 1999 and replaced the call trading system. Automated trading refers to a procedure whereby dealers on the trading floor of the stock exchange enter buy and sell orders for shares into an electronic trading system. The trading system is designed to generate trades automatically when selling and buying prices match.

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7. What is the CSCS?

CSCS is an acronym for the Central Securities and Clearing System, the Company that provides central clearing services for dealers that trade on The Nigerian Stock Exchange. It was incorporated in 1997 and has since provided central clearing services for investments in The Nigerian Stock Exchange. Central clearing refers to a process whereby the registration, clearing, settlement and delivery processes are centralized thereby reducing the cost and time involved in processing trades on the stock exchange.

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8. What is dematerialisation?

Dematerialization is an offshoot from the application of central clearing. It is a central process where the registration of shares is handled by a computer without a share certificate having to be issued by the company.

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9. What is demobilisation?

Demobilization refers to the lodging of share certificates with the central depository for shares with the understanding that the shares would be immobilized and can therefore not be withdrawn. Therefore, subsequent trades on the immobilized shares would only lead to the transfer of units of the shares from the account of the seller to that of the buyer.

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