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SS3: COMMERCE - 2ND TERM

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Meaning of Second Tier Securities Market

The Nigerian stock exchange introduced the second tier securities market (SSM) for the quotations and listing of small and medium scale enterprises (SMES) that could not meet the stringent conditions of the conventional market. The second-tier securities market is an alternative to the main market to meet the desires of the small and medium scale enterprises who want to raise money from the capital market. It can be described as an alternative window for companies or lesser financial strength to raise funds. Buying and selling of securities can also be carried out by the stockbrokers in the same way as listed companies. All the rules and regulations in the bigger market are applicable to the SSM. Full protection is provided for the investors in the second tier securities market.

Advantages of SSM to Companies and Investing Public

1. It is a training ground for quoted companies wishing to be listed in the first tier market.

2. The real market value of a company’s securities can be established by participating in the second tier security market.

3. It creates an avenue for buying and selling existing shares and securities of old companies.

4. It is another way of raising funds and capital for the growth and development of the companies.

5. It ensures the survival and continuity of a company even at the death of its founders.

6. It is a means of raising long term investments and obtaining loans.

7. It offers professional and expert advice to the companies and they would be investors.

8. Through the second-tier market, the image of the company can be promoted

9. It helps to protect the public from being cheated by unscrupulous companies. This is done through the Nigerian Stock Exchange Council and Securities and Exchange Commission who stand as watchdogs of all the quoted companies wishing to be listed in the first-tier market.

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