NSE: Amended par value and pricing methodology rules now effective
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The Nigerian Stock Exchange (The Exchange or NSE) is pleased to announce that the amended Pricing Methodology and Par Value Rules of the Exchange, which had been approved by the Securities and Exchange Commission (SEC) shall become effective today, Monday, January, 2018. The new Rules can be found in Rules 15.29 and 15.30 respectively of the Rulebook of the Exchange, 2015 (Dealing Members’ Rules).
The Rules will be implemented on The Exchange’s trading engine on the effective date, specified the revised price limit, price movements and tick sizes i.e. 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.
Commenting on the new Rules, Head, Market Surveillance and Investigations Department, NSE, Mr. Abimbola Babalola said, “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”.
According to Babalola, in order to achieve the aforementioned 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 should be noted that the new Group “C” consists of equity securities that are priced below Five Naira (N5.00) per share, for at least four (4) of the last six (6) months, or new security listings that are priced below Five Naira (N5.00) per share at the time of listing on NSE”, he added.
Specifically, the new price groups, price limits, tick sizes, and minimum trades’ quantity required to change prices for equity securities traded on The Exchange are shown in the table below:
|Price Range Trading Period|
|A||10,000||N0.10||N100.00 or above, for 4 of the last 6 months, or new security listings priced at N100.00 or above at the time of listing|
|B||50,000||N0.05||N5.00 or above but lower than N100, for 4 of the last 6 months, or new security listings priced at N5.00 or above but lower than N100 at the time of listing|
|C||100,000||N0.01||Lower than N5, for 4 of the last 6 months, or new security listings priced lower than N5 at the time of listing|
As stated by Babalola, market participants should be informed that the new Par Value Rule specifies that the price of every share listed on NSE shall be determined by the market forces and equities may now trade below the erstwhile price floor of fifty Kobo (N0.50) per unit. “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”.
He advised investors to contact their Stockbrokers to ascertain whether any of their open orders, will be impacted by this amendment.