Correct Option: B. a member of the Nigeria stock exchange Detailed Explanation: The second tier security market, often referred to as the Second Tier Securities Market (SSM), is a segment of the Nigerian Stock Exchange (NSE) that is specifically designed to facilitate the trading of shares of smaller, less established companies. Here’s a step-by-step breakdown of why option B is correct:

1. Definition of the Second Tier Security Market:
2. The second tier market is a platform within the Nigerian Stock Exchange that allows smaller companies to list their shares. This market is crucial for companies that may not meet the stringent requirements of the main market but still wish to access capital from public investors.
3. Membership of the Nigerian Stock Exchange:
4. The second tier market operates under the umbrella of the Nigerian Stock Exchange. This means that it is not an independent entity but rather a part of the larger structure of the NSE. Companies listed on this market are still subject to the regulations and oversight of the NSE, which ensures a level of investor protection and market integrity.
5. Purpose and Functionality:
6. The primary purpose of the second tier market is to provide a platform for smaller companies to raise funds by issuing shares to the public. This is particularly important for fostering growth and development in the economy, as it allows these companies to access capital that they might not be able to secure through traditional banking channels.
7. Regulatory Framework:
8. Being a member of the Nigerian Stock Exchange means that the second tier market adheres to the rules and regulations set forth by the NSE. This includes compliance with reporting requirements, corporate governance standards, and other regulatory measures that protect investors.

Why Other Options Are Incorrect:

• Option A: an appendage to the Nigeria stock exchange:
• This option suggests that the second tier market is merely an accessory or an additional feature of the NSE. While it is true that the second tier market is part of the NSE, describing it as an "appendage" undermines its significance and operational independence as a distinct market segment.
• Option C: meant for the shares of quoted private companies:
• This option is misleading because the second tier market is primarily for public companies that are smaller and may not be fully established. "Quoted private companies" implies that these companies are not publicly traded, which contradicts the very nature of the second tier market where shares are publicly listed and traded.
• Option D: a regulating arm of the Nigerian stock exchange:
• This option incorrectly categorizes the second tier market as a regulatory body. The second tier market does not have regulatory authority; rather, it operates under the regulations set by the Nigerian Stock Exchange. The NSE itself is the regulatory body that oversees all trading activities, including those in the second tier market.

Summary of Key Points:

• The second tier security market is a segment of the Nigerian Stock Exchange designed for smaller companies to raise capital.
• It operates under the regulations of the NSE, ensuring investor protection and market integrity.
• The market is not an appendage or a regulatory body but a vital part of the NSE's structure.
• It facilitates public trading of shares for companies that may not qualify for the main market listing.

This understanding of the second tier security market is essential for anyone preparing for exams in commerce, particularly those focusing on financial markets and securities.