Thesis Abstract

Abstract
The Central Securities Clearing System (CSCS) has played a significant role in the development and operation of the Nigerian capital market. This research project aims to investigate the effect of the CSCS on the Nigerian capital market by examining its functions, benefits, challenges, and overall impact on market efficiency and investor confidence. The study will employ a mixed-methods approach, combining both quantitative and qualitative research methods. Quantitative data will be collected from the Nigerian Stock Exchange (NSE) and CSCS to analyze trading volumes, settlement times, and overall market performance before and after the introduction of the CSCS. Qualitative data will be gathered through interviews with market participants, regulators, and stakeholders to understand their perceptions and experiences with the CSCS. The findings from this research are expected to provide valuable insights into how the CSCS has influenced the Nigerian capital market. It is hypothesized that the CSCS has improved market transparency, reduced transaction costs, and enhanced investor confidence through its automated clearing and settlement processes. However, challenges such as operational inefficiencies, technological limitations, and regulatory constraints may have hindered the full realization of the CSCS's potential benefits. By analyzing the impact of the CSCS on market liquidity, price efficiency, and overall market stability, this research seeks to contribute to the existing literature on the role of central securities depositories in emerging markets. The results of this study can inform policymakers, market participants, and investors about the importance of efficient post-trade processes in maintaining a well-functioning capital market. Overall, this research project aims to shed light on the effect of the CSCS on the Nigerian capital market and provide recommendations for improving its operations and maximizing its benefits. The findings will contribute to the ongoing efforts to strengthen the regulatory framework, enhance market infrastructure, and promote investor confidence in the Nigerian capital market.

Thesis Overview

1.1 BACKGROUND OF STUDY

1.2 STATEMENT OF PROBLEM

One of the functions of the Central Securities Clearing System is certificate dematerialization but most investors are not aware of the operations of the CSCS nor of the facility as they prefer to keep the paper certificate. From January 1, 2009, investors shares were being lodged directly online with the CSCS. Prior to this new directive, the following problems were observed before the introduction of CSCS:-

1. Cancellation and frequent issuance and re-issuance of share certificate when shares changed hands.
2. Constant signature verification
3. Capital gains not exploited
4. Delay in the receipt of share certificate
5. Loss of investors’ confidence in the trading activities on the capital market
6. Materialization of share certificate.

With the introduction of the CSCS automation of the operations of activities on the Nigerian Capital Market also took place with IT innovation. Before now, there was a problem of:-

1. Stockholders trading on investors stock without the consent of the investors
2. Lack of public awareness of the operations of CSCS
3. Non-automated system.

1.3       OBJECTIVES OF THE STUDY
The research study is undertaken with a view of achieving the following objective. Which are:-

For a better formulation of hypotheses, he following research questions was drawn:

In pursuance of this study, three null hypotheses and their alternative will be set out
Hypothesis one

H0: CSCS have negative effect on the Nigerian Capital Market

H1: CSCS have positive effect on the Nigerian Capital Market

Hypothesis two

H0: CSCS have negative effect on investors’ confidence in the trading activities on the Nigerian Capital Market

H1: CSCS have positive effect on investors’ confidence in the trading activities on the Nigerian Capital Market

Hypothesis three

H0: CSCS share certificate dematerializations have negative effect on the performance of trading activities on the Nigeria capital market

H1: CSCS share certificate dematerializations have positive effect on the performance of trading activities on the Nigeria capital market

1.6 SCOPE OF THE STUDY

The scope of the study shall cover the clearing and settlement system in the Nigerian stock exchange Onitsha, the activities of the Central Securities Clearing System, its establishment, benefits and problems from inception. It shall also cover how the Central Securities Clearing System can improve the transactions in the Nigerian Capital Market. The place of the study is Asaba Metropolis and it involves seventeen years (21) of assessment. Secondary data will be used; facts figures and other relevant statistic shall be obtained from the Nigerian Stock Exchange Onitsha, Newspapers Journals, electronic media, fact book and related books.

1.7 SIGNIFICANCE OF THE STUDY

The significance of the study is towards creating a positive awareness amongst investors, stockbrokers and capital market operators about the operations of the Central Securities Clearing System and its effect on the performance of trading activities on the performance of trading activities on the Nigerian Capital Market.

It will result to more prompt and accurate clearing settlement, delivery and custodian system in the Nigerian Stock Exchange brings about the efficient service delivery of stockbrokers and investors confidence in the Central Securities Clearing System operations. Also it will bring about increase in knowledge to the academic society, it will enable further researcher to acquire more knowledge and research of its.

1.8 LIMITATIONS OF THE STUDY