Participants in the Capital Market for SS 3

Class: SS 3
Term: First Term
Week: 9
Age: 16 years
Duration: 45 minutes
Subject: Commerce
Topic: STOCK EXCHANGE
Subject Matter: Bodies that can access the capital market, public companies, government; Second tier security market, meaning, advantages to companies, advantages to the investing public; Second tier security market; operating regulation, primary and secondary market, first tier and second tier; (differentiate)
Previous Lesson: Securities Traded on the Stock Exchange

Specific Objectives

By the end of the lesson, pupils/students should be able to:

Cognitive Domain

• Identify bodies that can access the capital market.
• Define the Second Tier Security Market (SSM).
• State the advantages of the SSM to companies.
• State the advantages of the SSM to the investing public.
• Describe the operating regulations of the SSM.
• Differentiate between primary and secondary markets.
• Differentiate between First Tier and Second Tier markets.

Affective Domain

• Appreciate the role of the capital market in economic development.
• Participate actively in classroom discussions and role-play.

Psychomotor Domain

• Demonstrate understanding of stock exchange transactions through role-play.
• Prepare a simple comparison of market tiers.

Social Domain

• Collaborate effectively with peers during group activities.

Reference Materials

The following resources were used in planning this lesson:

• 2025 Revised 9 Years Basic Education Curriculum
• Relevant State Unified Scheme of Work
• A suitable Commerce textbook for SS 3
• The HeadTeacher Scheme of Work

Instructional Materials

The teacher will teach this lesson with the aid of:

• Charts illustrating the capital market structure.
• Diagrams showing primary and secondary market operations.
• Role-play materials (e.g., mock share certificates, order forms).
• Whiteboard/Blackboard and markers/chalk.

Rationale for the Lesson

This lesson is important as it provides students with a foundational understanding of how businesses and governments raise long-term capital. It clarifies the different segments of the stock exchange, enabling students to grasp the various investment opportunities and regulatory frameworks within the financial market, which is essential for informed economic decision-making.

Prerequisite/Previous Knowledge

Students should have a basic understanding of financial markets, investment, and different types of business organisations.

Lesson Content/Board Summary

Participants in the Capital Market

Bodies That Can Access the Capital Market

The capital market is a vital platform where long-term funds are raised and invested. Key participants who access this market to raise capital include:

1. Public Companies: These are companies whose shares are listed on a stock exchange and are available for purchase by the general public. They access the capital market to raise substantial long-term capital for expansion, new projects, or to restructure their finances by issuing shares (equities) or bonds (debt securities).
2. Government: Governments (federal, state, and local) also access the capital market to finance public projects, infrastructure development, and budget deficits. They do this by issuing various types of government securities such as Treasury Bills, Treasury Bonds, and Development Stocks.

Second Tier Security Market (SSM)

Meaning of Second Tier Security Market

The Second Tier Security Market (SSM), also known as the Growth Board in some exchanges, is a segment of the stock exchange designed for small and medium-sized enterprises (SMEs) and companies with smaller capital bases that may not meet the stringent listing requirements of the main board (First Tier Market). It provides an avenue for these growing companies to raise long-term capital from the public.

Advantages of Second Tier Security Market to Companies

1. Access to Capital: It provides smaller companies with an opportunity to raise long-term capital for growth and expansion, which might otherwise be difficult to obtain from traditional sources.
2. Less Stringent Listing Requirements: The listing requirements (e.g., minimum share capital, profit history, number of shareholders) are generally less strict compared to the main board, making it more accessible for SMEs.
3. Enhanced Visibility and Credibility: Listing on the SSM can improve a company’s public profile, attract investors, and enhance its credibility, making it easier to secure future financing or partnerships.
4. Improved Corporate Governance: Companies listed on the SSM are required to adhere to certain corporate governance standards, which can lead to better management practices and increased transparency.

Advantages of Second Tier Security Market to the Investing Public

1. Investment Opportunities: It offers investors opportunities to invest in promising small and medium-sized companies with high growth potential, which may yield significant returns.
2. Diversification: Investors can diversify their portfolios by including shares of companies listed on the SSM, spreading risk across different types of businesses.
3. Liquidity: Although generally less liquid than the main board, the SSM still provides a market where investors can buy and sell their shares, offering some level of liquidity.

Operating Regulation of the Second Tier Security Market

The Second Tier Security Market operates under specific regulations set by the stock exchange and regulatory bodies (e.g., Securities and Exchange Commission – SEC) to ensure transparency, investor protection, and market integrity. These regulations typically cover:

1. Listing Requirements: Specific criteria companies must meet to be listed, including minimum capital, operational history, and public float.
2. Disclosure Requirements: Companies are required to regularly disclose financial results, material events, and other relevant information to the public and regulators.
3. Trading Rules: Rules governing how securities are bought and sold on the market, including pricing mechanisms and settlement procedures.
4. Corporate Governance Standards: Requirements for board structure, independent directors, and shareholder rights to ensure good corporate practices.

Differentiation Between Primary and Secondary Markets

The capital market comprises two main segments:

1. Primary Market:
   • This is where new securities (shares, bonds) are issued for the first time by companies or governments to raise capital directly from investors.
   • Funds flow directly to the issuing entity.
   • Examples include Initial Public Offerings (IPOs) or new bond issues.
2. Secondary Market:
   • This is where previously issued securities are traded between investors. The issuing company or government is not directly involved in these transactions and does not receive any funds from them.
   • It provides liquidity for investors, allowing them to buy and sell existing securities.
   • The stock exchange facilitates secondary market transactions.

Differentiation Between First Tier and Second Tier Markets

Within the stock exchange, markets are often segmented into different tiers based on company size, capitalisation, and listing requirements:

1. First Tier Market (Main Board):
   • Designed for large, well-established companies with significant capitalisation, strong financial performance, and a proven track record.
   • Has more stringent listing requirements and higher disclosure standards.
   • Generally offers higher liquidity and attracts institutional investors.
   • Examples include major listed companies on the Nigerian Exchange (NGX) Main Board.
2. Second Tier Market (Growth Board/SSM):
   • Designed for small and medium-sized enterprises (SMEs) and growing companies that may not meet the requirements of the First Tier Market.
   • Has less stringent listing requirements to encourage smaller companies to raise capital.
   • May have lower liquidity compared to the First Tier Market.
   • Aims to foster the growth of emerging businesses.

Teaching Methods/Instructional Techniques

Discussion, Explanation, Question and Answer, Role Play, Guided Practice, Group Work.

Instructional Procedures

Step 1: Introduction

Time: 5 minutes

Teaching Skill: Elicitation/Engagement

Teacher’s Activity: The teacher asks students about how large companies or the government raise money for big projects. The teacher introduces the topic of the capital market and its participants.

Pupils’ Activity: Students respond to questions and listen attentively.

Learning Point: Capital market importance

Step 2: Bodies Accessing the Capital Market

Time: 7 minutes

Teaching Skill: Explanation/Identification

Teacher’s Activity: The teacher explains and lists the main bodies that access the capital market, focusing on public companies and government, using charts to illustrate.

Pupils’ Activity: Students identify and discuss the roles of public companies and government in accessing the capital market.

Learning Point: Key capital market players

Step 3: Second Tier Security Market (SSM) – Meaning

Time: 5 minutes

Teaching Skill: Definition/Clarification

Teacher’s Activity: The teacher defines the Second Tier Security Market (SSM), explaining its purpose for SMEs and growing companies.

Pupils’ Activity: Students listen and contribute to defining the SSM.

Learning Point: Second Tier Market definition

Step 4: Advantages of SSM to Companies and Public

Time: 8 minutes

Teaching Skill: Elaboration/Discussion

Teacher’s Activity: The teacher discusses the advantages of the SSM for both companies (e.g., access to capital, less stringent requirements) and the investing public (e.g., investment opportunities, diversification).

Pupils’ Activity: Students list and explain the advantages of the SSM from both perspectives.

Learning Point: Benefits of SSM

Step 5: Operating Regulation of SSM

Time: 5 minutes

Teaching Skill: Explanation/Regulation

Teacher’s Activity: The teacher explains the general operating regulations governing the SSM, highlighting listing requirements, disclosure, and trading rules.

Pupils’ Activity: Students listen and ask questions about the regulations.

Learning Point: SSM operational rules

Step 6: Differentiation of Markets (Primary vs. Secondary, First vs. Second Tier)

Time: 8 minutes

Teaching Skill: Comparison/Role-play

Teacher’s Activity: The teacher differentiates between primary and secondary markets, and First Tier and Second Tier markets. The teacher then guides students to role-play a simple transaction on the stock exchange, demonstrating how new shares are issued (primary) and existing shares are traded (secondary), and briefly explains the role of a speculator.

Pupils’ Activity: Students participate in the role-play, observe, listen to explanations, and ask questions to clarify differences between market types.

Learning Point: Market differentiation

Step 7: Evaluation/Review

Time: 5 minutes

Teaching Skill: Questioning/Assessment

Teacher’s Activity: The teacher evaluates the learning by asking the following questions:

1. Mention two bodies that can access the capital market.
2. What is the Second Tier Security Market?
3. State two advantages of the SSM to companies.
4. How does the primary market differ from the secondary market?

Pupils’ Activity: Pupils answer orally and in writing.

Learning Point: Lesson comprehension

Step 8: Note-Taking

Time: 4 minutes

Teaching Skill: Guided Writing

Teacher’s Activity: The teacher guides pupils/students to copy the essential Board Summary notes on capital market participants and market tiers into their notebooks.

Pupils’ Activity: Pupils/students copy the notes carefully into their notebooks.

Learning Point: Board summary record

Step 9: Conclusion

Time: 3 minutes

Teaching Skill: Summarization

Teacher’s Activity: The teacher briefly recaps the key points of the lesson, emphasizing the importance of the capital market in economic growth and the distinct roles of its various segments and participants.

Pupils’ Activity: Students listen and reflect on the lesson’s main ideas.

Learning Point: Capital market summary

Continuous Assessment/Further Study

Type: Homework/Further Reading

Instruction: Research and write a short report on the following:

1. Identify one public company listed on the First Tier Market and one on the Second Tier Market of the Nigerian Exchange (NGX).
2. Compare their listing requirements and the types of investors they typically attract.
3. Explain how a speculator might influence share prices in either market.

Lesson Keywords

• Capital Market – A financial market where long-term debt or equity-backed securities are bought and sold.
• Second Tier Security Market (SSM) – A segment of the stock exchange for smaller, growing companies with less stringent listing requirements.
• Primary Market – Where new securities are issued for the first time directly by the issuer to investors.
• Secondary Market – Where previously issued securities are traded between investors.
• First Tier Market – The main board of a stock exchange, typically for large, established companies.
• Public Companies – Companies whose shares are traded on a stock exchange and owned by public investors.
• Government – National, state, or local authorities that issue securities to raise funds.
• Operating Regulation – Rules and guidelines governing the functioning of a market.

Differentiation

For weaker learners, simplify the explanations of market differentiation using more direct examples and provide pre-filled tables for comparison. Encourage peer support during the role-play. For faster learners, challenge them to research current events related to capital market activities or analyze the impact of specific regulations on market performance.

Suggested Lesson Videos

For further understanding of the capital market and its participants, students can search YouTube for:

• “Capital Market Explained for Students SS3”
• “Primary vs Secondary Market Stock Exchange”
• “First Tier and Second Tier Market Nigeria”

Teacher Guide for Using This Lesson Plan

Before the lesson, ensure you have charts illustrating the capital market structure and simple props for the role-play. Begin by engaging students with questions about financing large projects to connect to prior knowledge. Clearly explain the roles of public companies and government in accessing the capital market. When introducing the Second Tier Security Market (SSM), emphasize its purpose for SMEs and differentiate its requirements from the main board. Use the role-play activity to concretely demonstrate the distinction between primary and secondary market transactions. While a live speculator visit might not be feasible for a single lesson, you can simulate this by explaining their role and impact during the market transaction role-play. Guide students to copy the Board Summary notes after the main teaching points to ensure accurate record-keeping. Continuously check for understanding through questions and discussions, providing additional support for students struggling with the concepts and offering extension activities for those who grasp them quickly.