Nigerian stock exchange - nairametrics
  • Investing in the stock market is a risky venture that requires due diligence, sound judgement, and decision making.
  • Stockbrokers are a key component of any financial system, as buying and selling of stocks is impossible without them.
  • Selecting the right stockbroker will save you a lot of stress, heartache and most importantly, prevent you from losing your hard earned money. We look at the factors you should consider before choosing a stockbroker.

Here are 3 qualities of a good stockbroker

  1. They are listed on the website of SEC and NSE as qualified brokers

The first step you will need to take as a thorough investor will be to visit the website of the Securities and Exchange Commission (SEC), which is the regulatory body for stockbrokers, to have a look at the list of the licensed and registered stockbrokers in the country. The website is here.

stockbroker guide

The website of SEC will also provide you with information on breaches and infractions in the stock market by unscrupulous and poorly capitalized stockbrokers, so it is important to stay updated on capital market activities.

Sometimes in 2017, SEC revoked the licenses of 67 stockbrokers who will not be able to trade at the Exchange or function in any capacity as a stockbroking agent within the Nigerian capital market.

It is a fact that there are a lot of fraudulent stockbrokers who have a history of misdeeds or involvement in investigations which have tarnished their images. This is why a thorough research should be done to prevent you from handing your money to just anyone.

The Nigerian Stock Exchange (NSE) website also provides valuable information on dealing members in the Nigerian capital market with a status indicator of whether or not these brokers are active or inactive. The NSE website is here.

  1. They regularly feature on the NSE website as top stockbroking firms for the month

The NSE website publishes a list of the top 10 stockbroking firms on a monthly basis. This list shows the top brokers in terms of volume and value of transactions handled on a weekly and monthly basis.


All you need to do is look at the historical data (available on the site) of the brokers who have been consistent over a long period of time and note them. Knowledge of past and existing clients of any broker will also help you form an opinion on the character of that broker. A broker with a lot of high net-worth clients shows you the caliber of people who place their trust in his firm.

Deal book 300 x 250

3. They have online trading platforms

There are some stockbrokers in Nigeria who offer online trading platforms to customers. This self-service platform enables clients to execute trades real-time on the Nigerian Stock Exchange. Some of the benefits include:

  • Placing your buy/sell mandate online.
  • Viewing/printing your statement of account.
  • Viewing/printing your portfolio valuation.
  • Checking the status of your deposited share certificates.
  • Viewing/printing daily stock prices.

e-service stockbroker

To open an online trading account, you will be required to complete an online account opening form and also upload some documents such as:

  • Means of identification (Drivers license, National ID, International passport)
  • Passport photograph
  • Proof of residential address (current utility bill, electricity, telephone, waste management, water bill) not later than 3 months
  • Signature specimen

If the broker you choose offers online trading, you can try registering. This is because the easier it is to register, the better they are at executing trades.

-Guides to selecting a suitable stockbroker

After reviewing the list of eligible brokers, you would need to narrow the list further to pick the one that suits you most.

Try subscribing to free reports

Some stockbrokers provide customers with free reports and daily market updates. These reports are valuable resources which will keep the investor abreast of new developments in the economy and the stock market.

subscribe for free report

Subscribing to these reports, and in some cases stock tips, will give the prospective investor an idea of how good a broker is at projecting the future performance of the market or a company.


Referrals are also important. Ask your friends, colleagues and family members who are experienced in investing in the stock market to recommend a broker for you or sample their opinions the broker(s) you have chosen.

Social media channels and online forums where stock market matters are discussed help to show diverse opinions. You should look out for the very negative comments on any stockbroker(s).

Contact the Stockbroker

From the list of stockbrokers who would have piqued your interest, carry out a Google search on them and get their contact details. Then, send a mail or call their customer care representatives to see how responsive they are to you.

[ALSO READ: Three quick ways to find out if a stock is overvalued]

Determine your level of involvement and choose accordingly

As a passive trader, you can ask the firm to assign you an account officer who can help you execute trades.

If all you have is a little knowledge of the market and not much financial muscle, you can seek the services of a discount broker who will help you execute trades as you want.

You can also hire a full service broker who will provide you with a variety of services including research, trade execution and tax tips, if you have the financial strength.

 Select at least two stockbrokers


As with everything online, and even in life, it is good to keep options open. You would need a backup in case the systems of your main brokers’ fail and you need to make an urgent stock purchase or sale.

-Brokerage charges for buying and selling your stocks

The range for buy or sell charges will depend on the particular stockbroker you choose, however the fees you will be charged will be around the percentage listed in the schedule below:

Buy Charges

Title Charge %
SEC Fee 0.3 of consideration
Stamp Duty 0.075
CSCS Trade Alert 0.06
VAT on CSCS Trade Alert 5% of 0.06%
Brokerage fee 1.35%
Total 1.788%


Buy charges will range between 1.788% and 1.855% of consideration depending on the broker.

Sell Charges

Title Charge %
NSE Fee 0.3 – 0.5
Stamp Duty 0.075
CSCS Trade Alert 0.06
VAT on Trade Alert 5% of 0.06
CSCS Transaction Fee 0.3
VAT on Transaction Fee 5% of 0.3
Brokerage Fee 1.35
Total 2.088 – 2.1855


Sell charges will range between 2.088 – 2.1855 of consideration.

Consideration is the value of shares purchased – price of share × quantity of shares purchased.

The minimum amount of money you can invest with a broker will range from as low as N10,000 to as much as N5,000,000.

[DON’T MISS: Three quick ways to find out if a stock is overvalued]

BEWARE: This story was earlier published in 2017 and has just been revamped for public education –on July 19, 2019.


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