With effect from Friday, October 11, 2019, the Nigerian Stock Exchange (NSE), says investors and traders now need a minimum of 100,000 units to change the price of all securities groups.
The amendment to its rules on Pricing Methodology; price movements of traded equity securities, the NSE said in a statement on Thursday night, is “to ensure overall market stability, and efficiency and fairness in pricing NSE securities.”
Those affected are Rules 15:29.2. C.2 of the Rulebook of the Exchange, 2015 (Dealing Members’ Rules), which means that trades of fewer than 100,000 shares in any of the groups are small trades and “will not result in a change in the publicly reported price of such security.”
The review is coming 21 months after the bourse, on January 29, 2018, implemented amendments to its pricing methodology and par value rules which resulted in the categorization of quoted companies under three groups with different pricing rules.
Before the latest review, prices of securities would only change if the volume of 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.
As part of categorization, ‘Group A’ consisted of large-cap equities that have been priced at N100 per share or more 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. These included Nestle Nigeria, Nigerian Breweries, Guinness Nigeria, Dangote Cement, and Seplat Petroleum.
The second category, ‘Group B,” consisted of medium-priced equities 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. Most stocks on the exchange found themselves in this group, including most of the stocks in almost sectors, besides insurance.
The third category, Group C, consisted of equities that are 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.
Commenting on the amendment, chief executive of the NSE, Oscar Onyema, affirmed the bourse’s commitment “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.”