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CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

The effect of information and communication technology (ICT) on the operation of stock markets has been a subject of debate in recent times. A school of thought led by authors like Shiller (1989), Summers (1988), Poterba and Summers (1988) would argue that stock markets have become excessively volatile since the adoption of computer assisted trading strategies as the latter increase short-term price volatility and risks. They also argue that very few investors have access to online trading systems. Few actually own computers and have easy access to the Central Securities Clearing System. Many investor, they claimed, do not have access to a system that sends orders to stockbrokers for automated execution.

They also contend that ICT driven stock market operations are fraught with fraud and manipulation, which mostly affect individual investors. A case in point relates to the sale of shares without authorization of the stockholders, a practice that is given impetus by greed and dishonesty of some market participants.