Trading, Settlement and Market Operations
This domain tests the order lifecycle from client instruction to cleared funds.
Order handling
Verify mandate and available position or cash; capture the order accurately; execute on the client's terms or better; allocate fairly where orders are aggregated; issue a contract note; retain recordings and records. Do not front-run client orders, trade ahead of a client block, or cross trades outside the rules.
Market structure
Listed equities trade on NGX through dealing members on an automated platform; bonds, commercial paper and similar instruments trade on FMDQ; unlisted securities trade on NASD. CSCS is the central securities depository: holdings are dematerialised and held in book-entry form.
Settlement
Equities settle on a T+2 cycle, delivery versus payment. The seller's CSCS account is debited on settlement day, not trade day; funds become available after settlement and the firm's own cut-off. Failed trades are bought in or closed out under exchange rules, with a trade guarantee fund covering eligible failures.
Corporate actions
Dividends, bonuses, rights and reconstructions follow exchange and CSCS timetables; entitlement is fixed by the qualification date on the register, not by when the client remembers buying.
Worked example
A client sells 100,000 units on Monday and asks for the cash on Tuesday. Reasoning: trade date Monday, settlement Wednesday on T+2. The broker cannot pay before settlement because it does not yet hold cleared funds; paying early creates credit risk and a client-money breach. Explain the cycle, the contract note and the withdrawal cut-off.
Traps
Confusing trade date with value date; assuming shares can be sold before they are credited in CSCS; ignoring pledges, liens and frozen holdings; missing the qualification date for a dividend.