The Nigerian Stock Exchange has said the amendments to pricing methodology and par value rules, as contained in Rules 15.29 and 15.30 of its rulebook, shall become effective on Monday, January 29.
The rules, the NSE said on Friday, as reported by THE PUNCH had been approved by the Securities and Exchange Commission.
They specify the revised price limit, price movements and tick sizes, which refer to the price floor, minimum pricing increments and minimum quantity to be traded that will change the published price. The rules also classify equity securities into different price groups in order to achieve this.
The revised rules would be implemented on the Exchange’s trading engine on Monday, the local bourse said in a notice.
“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,” the Head of Department, NSE Market Surveillance and Investigations Department, Mr. Abimbola Babalola, was quoted to have said.
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, it stated.
The NSE said, “It should be noted that the new ‘Group C’ consists of equity securities that are priced below N5 per share, for at least four of the last six months, or new security listings that are priced below five naira per share at the time of listing on the Exchange.”
Specifically, the new price groups, price limits, tick sizes and minimum trades’ quantity required to change prices for equity securities traded on the Exchange were also broken down.
According to the bourse, market participants are also informed that 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 N0.50 per unit.
The NSE stated, “Therefore, traders are required to ensure that as from the above stated effective date, 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 are advised to contact their stockbrokers to ascertain whether any of their open orders will be impacted by this amendment.”