By Nkiruka Nnorom
Technology is fast changing the way we live and the way things are done. In fact, every sector is feeling the disruptive effect of technology and those who are slow to adapt to the changes are left behind in the evolution.
Things that used to be manually done stretching over hours and even days, could be achieved within minutes and this is made possible by a tool all of us possess – mobile phones, powered with internet connectivity.
Available statistics shows that as at fourth quarter (Q4) 2018, 172.8 million Nigerians own mobile phones, while 106.4 million were active on internet.
The Nigerian capital market is not left behind in the evolution. It has evolved over time from the days of Call-Over to now fully automated transactions. Dealing members now trade remotely from anywhere in the world without having to come to the trading floor of the Nigerian Stock Exchange, NSE, to execute their trades.
So, also it is with investors. Due to possession of mobile/smart phones, investors can also place their orders themselves from anywhere in the world and this is the cheering news for youths on the move and other tech-savvy individuals who hitherto were restricted by location and time.
This evolution is anchored by the Online Apps developed by dealing member firms in the Nigerian Stock Exchange, NSE, that now allow people to buy and sell shares with the approval of their stockbrokers.
Unfortunately, the number of people accessing the stock market, especially the young population is low, even with availability of platforms like this. Data from Nigeria Deposit Insurance Corporation (NDIC) on age distribution of investment in the market shows that investors between the ages of 25 and 34 make up only 8.1 percent of investors in the equities market, while ages 15 to 24 (mostly, parents driven) account for just 0.9 percent of the investors, leaving room for more of the younger generation of investors to participate in the market.
So, how can you leverage the online trading platforms provided by many investment firms to access the stock market and what benefit are derivable from this?
Accessing the online trading platform
According to Mr. Charles Fakrogha of Foresight Securities and Investment Limited, introduction of the online trading platforms by the stockbroking firms and other investment banking firms, followed the need to advance financial inclusion and get as many people as possible to come to the market.
Speaking to Vanguard MoneyDigest, he stated: “In a bid to do this, we use technology to encourage people. We also discover that it is an opportunity for technology-savvy age group – undergraduates, people still in high school (Senior Secondary 1, 2 and 3) – that are very good with using their phones and other technology tools, to use the online platform to access the stock market. We call it ‘Smart Trading’.”
Explaining how it works, he said: “It is not as if the investor will do the trading himself; what it does is that investors can key in their orders from any part of the world. To do this, he said the investor must register with his/her stockbroker, who will give him/her access to the platform for a fee depending on the agreement the investor has with the firm concerned.
“For risk management control, the stockbroker validates the order before it gets to the trading engine of the Exchange. If it is a buy or sell order, it will be taken, only that the stockbrokers okays the order.
However, depending on the type of subscription, an investor can, as well, put in the order and it goes directly to the trading engine, but the danger in this is that the investor is not seeing the entire market, he is seeing only the stock he is placing the order on,” he explained.
Fakrogha said with the online trading Apps, more investors now have the opportunity of accessing the market wherever they are in the world. Secondly, people who are tech-savvy will also be able to access the market using their phones.
He, however, said there is the need for investors to fully understand the implications before using the online platform.
While introducing LeadTrader, an online trading platform by Lead Capital Plc, the Managing Director, Mr. Wale Adewumi, stated that online platforms improve transparency in stocks trading, as well as provide efficient price discovery in the market. According to him, “it eliminates the age long rancour that arise in the process of share transaction between stockbrokers and investors as it transfers control for shares to be bought and sold completely to the investor, while also making share transactions convenient, fast and more transparent.
“It provides investors the comfort and convenience of executing their trading online via a range of devices such as desktop, laptops, tablets and other mobile devices,” he added.
He also emphasised that orders submitted via any online platform pass through a FIX compatible Order Management System, OMS, where appropriate compliance checks are in place to prevent erroneous orders going into the NSE’s trading engine.
He encouraged investors that are concerned about their trades being executed with precision at any time to embrace the platform.