Stock market basics: who does what, and where your money goes
Exchange, broker, custodian, registrar — the plumbing behind a single share purchase.
An exchange is a matching engine, not a shop
An exchange does not own the shares it lists and does not sell them to you. It matches buyers with sellers and publishes the price the last trade happened at. That is the whole job.
Which means the price you see is simply what one person was last willing to pay another. It is not a valuation and it is not a promise.
You reach the exchange through a licensed broker
Ordinary people cannot place orders on an exchange directly. A licensed broker — a dealing member in Nigeria, an investment dealer in Canada, a broker-dealer in the US — submits the order for you and charges a commission.
Checking that a broker is on the exchange's or regulator's own published list is the single most protective thing you can do. It takes two minutes.
Where the shares actually sit
You do not receive paper certificates. Ownership is recorded electronically at a depository — CSCS in Nigeria — under a number tied to your identity, and the company's registrar keeps the shareholder register used for dividends and voting.
This is why account details and next-of-kin records matter. Unclaimed dividends usually trace back to stale records, not to a company refusing to pay.
Bid, ask and the spread
The bid is the highest price a buyer is offering. The ask is the lowest price a seller will accept. The gap between them is the spread, and it is a real cost you pay every time you trade.
On thinly traded markets that gap can be wide, so a share can look cheap while being expensive to actually get in and out of.
Market order or limit order
A market order says: fill me now at whatever the going price is. A limit order says: fill me only at this price or better.
Beginners are usually safer with limit orders. It removes the chance of being filled at a price you never intended in a fast-moving or thin market.
Settlement takes days, not seconds
After a trade matches, the exchange and depository still have to settle it — moving cash one way and ownership the other. Most markets run on a T+1 or T+2 cycle, meaning one or two business days after the trade.
So money can appear in your account as "pending" for a couple of days. That is normal, not a fault.
What an index tells you
An index like the NGX All-Share, the S&P 500 or the JSE All Share tracks a basket of listed companies, so it gives one number for how a market moved. It is a thermometer, not something you own.
You can only own an index indirectly, through a fund that tracks it.
The one thing to remember
Exchange matches, broker executes, depository records, registrar pays. Use limit orders, expect settlement to take days, and verify your broker on the regulator's list.
