In an apparent response to allegations of price-fixing, the Nigerian Stock Exchange (NSE) has released a new set of rules regarding price movement and trading volumes. The exchange had last year circulated copies of the draft proposal to investors and members of the finance community
Here are key points from the new rules as approved by the Securities and Exchange Commission (SEC):
- The opening price of a stock will be calculated based on the price in the regular book alone.
- Pre market price of a stock will be recalculated each time a new order is entered.
Pre market is between 9.30am and 10.14am on the NSE. During this period, investors can place bids and offers, but no trading takes place. - A final opening price is calculated at the end of the pre-open state.
- Orders that match and are able to trade are queued in the market and traded at the opening price (some of them might be traded partially).
- Stocks are now classified into 3 price categories: Group A for stocks priced at N100 and above. Group B is for stocks priced more than N5 but less than N100. Group C is for stocks priced between N0.01 to N5.00.
- Trades of fewer than Ten Thousand (10,000) shares in Group A, Fifty Thousand (50,000) shares in Group B, and One Hundred thousand (100,000) shares in Group C, shall be regarded by the ATS as small trades.
- Small trades in an equity security shall not result in a change in the publicly reported price of such security.
- Price movements: The minimum quantity of equities traded that will change the published price of an equity security shall be as follows:
Group A: From a minimum quantity has been reduced from 50,000 to 10,000 units. Group B: Minimum quantity has been increased from 10,000 to 50,000 units.
Group C: A minimum quantity of 100,000 has now being placed.
- The minimum price movement that equities shall trade are as follows:
Group A: Ten (10) Kobo.
Group B: Five (5) Kobo.
Group C: One (1) Kobo.
- Closing Price of any security traded on The Exchange on any given Trading day shall be calculated as follows:
(1) The close price is the last trade price in the symbol’s primary listing market.
(2) Symbols that do not trade on a particular day use their last traded price from their primary market as their closing price.
This means that off market transactions which could be at a price lower or higher than the primary market price, have no influence on a company’s share price.
