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NSE reviews pricing methodology rules

In a bid to ensure overall market stability and efficiency and fairness in the pricing of securities, the Nigerian Stock Exchange, NSE has amended the rules on Pricing Methodology and price movements of equity securities traded on the Exchange.

In announcing the review, the Chief Executive Officer of NSE, Oscar N. Onyema, revealed that the Exchange is committed to a platform that engenders a fair and efficient market.

“The Exchange remains committed to maintaining a platform that engenders a fair and efficient market. This change is borne 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” he said.

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With the development, the minimum trade quantity required to change prices for equity securities traded on the Exchange will henceforth be one hundred thousand (100,000) units for all securities groups.

This implies that trades of fewer than One Hundred Thousand (100,000) shares in any of the groups are small trades. Small trades in equity security will not result in a change in the publicly reported price of such security. The Exchange implemented amendments to its pricing methodology and par value rules that saw the categorisation of quoted companies under three groups with different pricing rules on January 29, 2018.

Group A consists of large-cap equities that are 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.