The Effects of Automation on Prices and Volume of Stocks in the Nigerian Capital Market
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Finance & Banking Review
This paper examines the effects of automation on the prices and volumes of some companies in call-over days and post automation era. In 2000, stocks listed on the Nigerian Stock Exchange were transferred gradually from manual trading to automated trading. Using OLS technique, Secondary data are employed to assess the impact of the Automated Trading System (ATS) on both the volume of the shares traded on the floor of the Nigerian Stock Exchange and the trend of prices of stocks of Unilever Nigeria Plc, UAC of Nigeria Plc and A.G. Leventis Plc. The data are drawn from the Daily Official List, Stock Market Weekly Reports and Trade Extracts from the Central Securities Clearing System (CSCS), various financial and annual reports of the above companies (before and after automation).Our data are assembled in the pre-ATS (1996 – 1998) and post-ATS (2001 – 2003) era. The objective of this work is to evaluate the impacts of automation on the prices and volumes of traded shares of the selected companies. While our results show an increase in the volume of shares traded following the automation, prices of few shares decreased and no significant effects on prices were detected. We therefore recommend that the regulatory authorities in the Nigerian Capital Market in conjunction with the government should do something to broaden the scope of the market by deepening the number of stocks traded in it. The Bureau for Public Enterprises (BPE) should delay no further the introduction of the erstwhile non-performing government parastatals to the market to achieve the desired depth for the market.
Odeleye, A.T. (2009). The Effects of Automation on Prices and Volume of Stocks in the Nigerian Capital Market. Finance & Banking Review, 3(1&2), 22 - 44.