NSE Reviews   Pricing   Rules for Market Efficiency, Stability  

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Goddy Egene  

The Nigerian Stock Exchange (NSE) has announced the amendment to its rules on price movements of equity securities traded on the exchange effective last Friday.

Specifically, the amendments related to the minimum trade quantity required to change prices for equity securities traded on the exchange.  

According to the exchange, the new minimum trade quantity required to change prices for equity securities traded would henceforth be 100,000 units for all securities groups.   This implies that trades of fewer than 100,000 shares in any of the groups are small trades. Small trades in an equity security will not result in a change in the publicly reported price of such security. 

Speaking on the amendment, the Chief Executive Officer (CEO), Mr. Oscar Onyema, said: “The exchange remains committed to maintaining a platform that engenders a fair and efficient market. This change is born out of the need to ensure that all price improving (up/down) transactions are material, making the market more efficient and attractive. 

“We will continue to review our rules and rule-making processes to boost investor confidence in our market, while ensuring that NSE rules comply with international best practice.”

 The NSE had January 29, 2018, implemented amendments to its pricing methodology and par value rules that saw the categorisation of quoted companies under three groups with different pricing rules. Group A consisted of large-cap equities that were priced at N100 per share or above for at least four of the last six trading months, or new security listings that are priced at N100 or above at the time of listing on the exchange.  

The second category, Group B, consisted of medium-priced equities that were priced at N5 per share or above but less than N100 per share for at least four of the last six months, or new security listings that are priced at N5 per share or above but less than N100 per share at the time of listing on the exchange. 

The third category, Group C, consisted of equities that were priced at one kobo per share or above but below N5 per share for at least four of the last six months, or new security listings that are priced at one kobo per share or above but below N5 per share at the time of listing on the exchange. 

Hitherto, the prices of securities would only change if the volume of a trade was at a threshold of 10,000 for securities in Group A, 50,000 for securities in Group B and 100,00 for securities in Group C.