The Nigerian Stock Exchange (The Exchange or NSE), on Friday announced a review of its Equities Market Structure that would enhance level playing field for all market participants.
The move, which becomes effective on Monday, July 2, 2018, according a statement by the NSE, will also enable investors deploy broader trading strategies, enjoy best execution and benefit from enhanced market depth.
The statement listed changes to the Market Structure to include a situation where opening and closing auctions are “followed by Imbalance Sessions (where bids exceed offers, and vice versa). These Imbalance Sessions allow market participants enter Imbalance Orders to address imbalances from the auction sessions.
“Expansion of participants in the auction period to enhance fairness and competitiveness of the price setting mechanism.
“Introduction of the size test condition in price determination during the auction period; as it currently applies during the continuous trading session.
“Changes to the market price volatility mechanism such that daily Limit up Limit down (LULD) price band is now based on a single reference price (i.e., the previous day’s close) to allow for a symmetric up and down limit of 10% throughout the trading day,” the statement added.
The statement quoted Oscar Onyema, chief executive of the NSE as saying, the review “was carried out to support our hybrid market model which offers the benefits of best execution and tighter spreads to investors. Moreover, it provides potential for cheaper cost of capital to issuers in our market. This Market Structure is in line with our 2018 to 2021 corporate strategy aimed at boosting retail investor participation.”