CHAPTER ONE

INTRODUCTION

1.1    THE BACKGROUNG OF THE STUDY

The economic growth and development of any economy largely depend on the ability to raise capital through the capital market. The Nigerian stock exchange is a place where the enormous capital which is required to operate the huge industrial and commercial cooperation today can be raised.

Osaze (1991) asserted that the emergence of the institution of the Nigerian stock exchange is a spontaneous reaction of the enterprise economies. The significance reaction of the stock exchange in an economy such as our own cannot be over emphasized, for it is the bed-rock of large scale investment. The Nigerian government hopes to create an economy which would bring about the best in its citizens, compete effectively in the global market and improves the standard of living of its people. An economy where hard work, accountability and transparency would be the cardinal principle that both foreign and local investors would be proud to participate in. once investors looses confidence as a result of market abuse, the growth and development of capital market would be adversely affected and considerable effort would be required to restore confidence.

To be globally attractive and completive, the stock market must be seen to imbibe practices which are globally acceptable. For this reason government tries to put in place adequate regulatory mechanism to prevent or at least minimize market abuse in order to uphold the integrity and confidence that is very essential for the development of a viable and sustainable capital market.

The Nigerian stock exchange is the centre point of the Nigerian capital market. However, the Securities and Exchange Commission (SEC) and the central bank of Nigeria (CBN) are the apex regulatory bodies to the capital market. The tendency of our financial structure has been to channel loans to industries of the past rather than the future (i.e. the rich third world countries). This has become invariably clear that even those external financiers are eroding, thus the need for our own structure in Nigeria to meet up with the excess demand for capital to finance gigantic projects and businesses.

The international organization such as the world bank group are very conscious of the high risk involved in venture of loan given to third world countries which will eventually evade payment of such loans.

There is every need to meet such demand and requirements for smooth and long lasting system for sourcing of such requisite finance.

The study therefore examines in order to evaluate what regulatory bodies have done to ensure the development and sustenance of a viable capital market that will meet global challenges.