Stanbic IBTC, Cardinal Stone Lead N2.25trn Trading As Top Brokers Control 55% Of NGX

The top ten leading stockbroking firms in Nigeria’s capital market concluded the first nine months of 2024 with an exchange of 86.98b billion shares worth N2.25trn.

This figure represents a significant 55 per cent of the total transaction value recorded on the Nigerian Exchange (NGX) between January 1 and September 30, 2024.

In terms of volume, the top ten brokers were responsible for 41.77 per cent of the total shares traded during the period, according to the latest monthly broker performance report released by the NGX.

The report reflects a strong market performance despite headwinds such as rising inflation and interest rate hikes.

Investor confidence remained resilient, with sustained buying activity driving volumes higher across several sectors.

Market analysts noted that these factors, while posing challenges, did little to deter the dominant stockbrokers from maintaining their significant share of trading activity.

Among the top-performing firms, Stanbic IBTC Stockbrokers Limited led the market with a total transaction value of N545.5bn, accounting for 13.35 per cent of the overall market transactions in the nine-month period.

Cardinal Stone Securities followed closely, recording N416.55bn in traded shares, representing 10.19 per cent of total transaction value.

United Capital Securities rounded out the top three, transacting N294.02bn worth of shares, which contributed 7.19 per cent to the market.

Other notable performers include Apt Securities & Funds, which facilitated trades valued at N204.62bn, and EFG Hermes, which exchanged shares worth N159.8bn.

The remaining firms in the top ten include Cordros Securities (N148.41bn), Meristem Stockbrokers (N129.85bn), CSL Stockbrokers (N122.75bn), FBN Quest Securities (N116.53bn), and Chapel Hill Denham (N109.61bn).

These ten firms have established themselves as key players in the Nigerian stockbroking industry, driving a significant portion of market activity.

Their collective dominance is seen in both value and volume of transactions, influencing broader market trends.

The dominance of these top brokers is not without its challenges. Analysts have pointed to the volume of transactions as a critical factor shaping the Nigerian stock market.

A significant portion of the market’s volume is controlled by a select group of brokers, many of whom work with foreign institutions and large local investors.

This concentration of market power among a few stockbroking firms has led to a cyclical pattern of market behavior.

When these firms engage in heavy buying, the market tends to rally, but when they withdraw and take profits, a bearish trend follows.

This back-and-forth movement has been a defining feature of the Nigerian market in recent years.

According to market experts, the ability of these firms to control substantial volumes of trades gives them considerable influence over market direction.

This influence is further strengthened by their diversified portfolio of clients, which includes foreign portfolio investors (FPIs), local institutional investors, and high-net-worth individuals.

The dominance of a few large brokers has sparked concerns about the competitive dynamics within the Nigerian stock market.

The Group Managing Director of Crane Securities Limited, Mike Eze in an interview with The WHISTLER, expressed concern that the concentration of market power in the hands of a few firms has led to imperfect competition.

According to him, the activities of these big players create an environment where smaller stockbroking firms struggle to compete, leading to reduced opportunities for other market participants.

“In addition to being the biggest trading houses for Foreign Portfolio Investments (FPIs), these firms also dominate local institutional and high-net-worth investors. This keeps other players at bay,” the managing director noted.

Since the NGX introduced broker rankings based on transaction volume and value in 2011, competition among stockbroking firms has intensified.

However, the persistent dominance of the top brokers suggests that market concentration remains a challenge.

As the market moves into the final quarter of the year, all eyes will be on how these leading firms navigate evolving economic conditions, particularly in light of inflationary pressures and potential interest rate adjustments.

Their performance will continue to shape the trajectory of the Nigerian capital market, influencing both domestic and foreign investment flows.