NSE Delists Four Firms, Automates Rights Issue Trading, Settlement

MARKET NEWS

The Nigerian Stock Exchange (NSE) last week delisted Beco Petroleum Products Plc, MTECH Communications Plc, MTI Plc and UTC Nigeria Plc. The NSE said in the a statement that the delisting of the companies was approved by the Quotations Committee of the National Council of The Nigerian Stock Exchange (QCN) since February 24, 2017.

While the Chief Executive Officer of the NSE, Mr. Oscar Onyema had said that delisting of companies was to protect investors, shareholders had insisted that the regulators have not been doing enough to protect retail shareholders in the market.

“I want to note that a number of shareholders said that we are not protecting their interest; in reality we are protecting them. I am making it very clear that you cannot be a listed company and stay for two or three years without providing your financial statement to the public. On what basis are they protesting,” Onyema had said.
Meanwhile, the NSE has announced the automation of Rights Trading and Settlement with effect from May 8(today), 2017. With this, shareholders can sell subscription rights both efficiently and at fair prices.

Speaking on the this development, Executive Director, Market Operations and Technology, NSE, Mr. Ade Bajomo, said: “The automation of Rights trading and settlement in the Nigerian capital market will enhance price discovery as rights can now be traded and re-traded without settlement complexities. It will help eliminate operational challenges resulting from manual trading and cash settlement between counterparties, whilst simplifying counterparty trade reconciliation between the brokers, registrars and the NSE.”
Bajomo explained that “for an investor to be eligible to participate in rights trading, he/she must have a CSCS account set up through a licensed Dealing Member firm of the Exchange. In addition, the investor must fund his/her broker with the consideration value, premium and transaction fees, prior to execution of his/her mandate.”
Prior to this automation, trading and settlement of rights, where an investor decides to sell on the floor of the Exchange, was done manually.

A rights issue is an offer to existing shareholders to purchase additional shares in a company during the company’s issue of new shares. The invitation to existing shareholders is usually made in proportion to their existing holdings, allowing them to buy the newly issued shares at a fixed price, usually at a discount to market value of the shares, within a specific subscription period. A rights issue is therefore one of the ways by which a listed company can raise funds from its existing shareholders.