Key takeaways
- Stockbrokers are regulated financial professionals who trade stocks on behalf of their clients.
- Stockbrokers can either be individuals or firms.
- Stockbrokers can also handle specialized services for their clients as it relates to investment.
- The type of stockbroker you employ is determined by the kind of services you need.
What is a stockbroker?
A stockbroker is a regulated representative of the financial market that buys and sells stocks and other financial securities for its clients.
A stockbroker usually acts as a middleman between the clients and the stock market. Stockbrokers handle transactions for their clients, who could be individuals or firms. They usually work for brokerage films but can also work independently.
What is the role of a stockbroker?
- A stockbroker handles transactions for its clients in the stock market.
- They buy and sell stocks for their clients.
- They manage their clients’ investment portfolios.
- They research and understand the market and advise their clients accordingly.
- They inform their clients of new opportunities in the market.
- They learn about the latest financial and tax regulations in the market.
Types of stockbrokers
1. Discount stockbrokers
Discount stockbrokers are involved with only the buying and selling of stocks for their clients. They don’t offer other services such as personalized research analysis, financial advice, retirement planning, etc. Discount stockbrokers are not as knowledgeable about the market as those in full-service brokerage firms.
2. Full-service stockbrokers
Full-service stockbrokers, as the name suggests, offer fully specialized services as regards market research, investment advice, portfolio management, evaluation of financial reports, reporting investment opportunities, aiding decision-making process, etc in addition to trading stocks on behalf of the clients.
They have a wide range of knowledge across the market and offer high-value services to their clients.
3. Direct access stockbrokers
Direct access stockbrokers leverage technology to advance trading for investors who have done their research and want fast transactions and execution through an advanced trading platform.
What skills do stockbrokers need?
- A degree or professional certification
- Communication skills
- Analytical skills
- Negotiation skills
- Proficiency in maths
Where do stockbrokers work?
Stockbrokers usually work in brokerage firms but they can also work independently on their own as long as they are certified and regulated by the relevant regulatory bodies.
Stockbrokers in Nigeria
Like in the global stock market, the stock exchange in Nigeria follows the same rules, and the roles and responsibilities of stockbrokers are not exempted. The Nigeria Stock Exchange Commission (NSE) now Nigeria Exchange Group (NGX) is active in the market alongside the Security and Exchange Commission. The Nigeria stock exchange market is one of the biggest stock exchange markets in Africa and it hosts over 100 licensed brokers.
Who are the top stockbrokers in Nigeria?
These are the top stockbrokers in Nigeria according to market volume as of the second quarter of 2022;
| Rank | Stockbroker | Quantity | % of market volume |
| 1 | Cardinalstone Securities Limited | 65,136,433,552 | 60.01 |
| 2 | Chapel Hill Denham Securities Limited | 6,592,530,374 | 6.07 |
| 3 | CSL Stockbrokers Limited | 3,952,989,895 | 3.64 |
| 4 | Morgan Capital Securities Limited | 2,505,163,931 | 2.31 |
| 5 | Apt Securities and Funds | 1,548,269,863 | 1.43 |
| 6 | Finmal Finance Company Limited | 1,479,971,461 | 1.36 |
| 7 | Meristem Stockbrokers Limited | 1,372,195,168 | 1.26 |
| 8 | Stanbic IBTC Stockbrokers Limited | 1,361,740,272 | 1.25 |
| 9 | FBN Quest Securities Limited | 1,332,930,948 | 1.23 |
| 10 | Cordros Securities Limited | 1,004,731,417 | 0.93 |
How to become a stockbroker in Nigeria?
- Get a degree in any finance-related field.
- Register with the Chartered Institute of Stockbrokers (CIS).
- Register for the CIS professional courses.
- Register for the Certified International Investment Analyst (CIIA) program.
- Register as a Dealing member of the Nigeria Exchange Group.
How much do stockbrokers make in Nigeria?
There is no definite amount of money stockbrokers can make. A stockbroker’s commission is usually based on the services they are rendering and their commission agreement terms with their clients. This implies that if a transaction has a good return on investment, a stockbroker will likely earn a higher percentage of income and vice versa.
Who regulates the stockbrokers?
In Nigeria, the Securities and Exchange Commission is responsible for regulating stockbrokers. The Nigerian Exchange Group (NXG) and Central Bank of Nigeria (CBN) are also agencies that can regulate stockbrokers.
Bottom Line
Stockbrokers play an important role in the stock exchange market. They offer their services to investors and help maintain a balanced relationship between investors and the market. When looking to hire a stockbroker, it is important to know the kind of services you are looking for and how a stockbroker can help you achieve your goals. Always ensure that you seek professional advice to avoid issues.
How to invest in stocks on Cowrywise
You can purchase either moderate or aggressive funds on Cowrywise and you will automatically access a pool of different stocks from each fund you invest in. Follow the link below.
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