The Nigerian Stock Exchange, on Friday reminded the nation’s stock market community that the amended Rules 15.29 and 15.30 of its Rulebook, relating to Pricing Methodology and Par Value respectively, 2015 (Dealing Members’ Rules), shall come into effect on its trading engine from Monday, January 29, 2018.
The Rules, which have been approved by the Securities and Exchange Commission (SEC), specify the revised price limit, price movements and tick sizes (that is: price floor, minimum pricing increments and minimum quantity) that when traded is capable of changing the published price of a stock.
A statement by the NSE said the Rules also classify equity securities into different price groups in order to achieve this.
The statement quoted Abimbola Babalola, head of the NSE’s Market Surveillance and Investigations Department as saying “the amended stratification of price movements, price limits and tick sizes aims at improving liquidity, narrowing spreads, and ensuring that all price improving (up/down) transactions are material, making the market more efficient for all participants.”
In order to achieve the aims of improved liquidity, narrowed spreads, material price improvements, and market efficiency, the amendments to the Pricing Methodology Rule included the introduction of a new price group – “Group C” consisting of equity securities that are priced below Five Naira (N5.00) per share, for at least four of the last six months.
It would also apply to new security listings that are priced below Five Naira each at the time of listing on The Exchange.
The new Par Value Rule specifies that the price of “every share listed on The Exchange shall be determined by the market forces and equities may now trade below the erstwhile price floor of 50 kobo per unit.”
As a result, traders must ensure that as from Monday, “all open and subsequent priced orders in equity securities comply with the amended requirements for each price Group of equities and in approved minimum increments accordingly.”
Investors were therefore advised to contact their Stockbrokers to ascertain whether any of their open orders, will be impacted by this amendment.
