The Nigerian Exchange (NGX) has introduced new rules that will significantly alter how share prices move on the exchange by setting minimum trading volume thresholds before prices can change, according to information obtained by Nairametrics from multiple market sources.

Three independent stockbrokers and traders familiar with the development confirmed the new framework to Nairametrics.

The effective date is also expected to be communicated by the exchange in due course.

Confirming the changes via its new Rulebook seen by Nairametrics, the NGX stated:

Other News

  • “Price Movements: the minimum quantity of equities traded that will change the published price of an equity security shall be as follows:
  • (A) Group A: Ten Thousand (10,000) units.
  • (B) Group B: Fifty Thousand (50,000) units.
  • (C) Group C: One Hundred Thousand (100,000) units.”

Under the new rules:

  • Stocks trading at N1,000 and above will require a minimum of 10,000 shares to be traded before a price movement can occur.
  • Stocks trading at N500 and below N1,000 will require a minimum of 50,000 shares to trigger a price change.
  • Stocks trading at below N500 will require a minimum of 100,000 shares to move the market price.

The development marks a significant shift in the exchange’s price discovery mechanism and is expected to affect trading strategies, particularly in stocks where relatively small volumes have historically been sufficient to move prices.

Market participants say the move could help improve price stability and reduce the impact of low-volume transactions on share prices, especially in highly priced equities. However, some traders are already expressing concerns that the new thresholds could reduce price responsiveness in less liquid stocks.

The policy comes amid heightened regulatory attention on market integrity, liquidity, and price formation as the Nigerian capital market continues to attract increased retail and institutional participation.

Market stakeholders react

Abiodun Ogunniyi, Head of Research at GTI Capital Limited, described the development as a positive reform that addresses concerns repeatedly raised by market operators.

According to him, one of the biggest challenges facing high-priced stocks has been the difficulty of moving their prices due to the large transaction values required under the previous structure.

  • “The challenge with many high-priced stocks is that they tend to be illiquid. This adjustment is a response to concerns that have existed for some time and should make it easier for market prices to reflect investor demand,” Ogunniyi said.

He noted that the rule could improve liquidity in premium stocks by reducing the volume threshold required for price movements.

  • “Before now, movement in some of these stocks was largely dependent on institutional liquidity. This reform should make it easier for market activity to influence valuations and improve price discovery,” he added.

Ogunniyi also argued that the development could increase retail investor participation in high-priced equities, which many smaller investors previously avoided because of perceived barriers to entry.

Beyond the pricing methodology, he urged regulators to continue reviewing free-float requirements, describing market liquidity as one of the major challenges facing the Nigerian capital market.

  • “We need to free up liquidity. The issue of free floats remains a major conversation in the market. More liquidity means better price discovery and a more efficient market,” he said.

Aruna Kebira, Managing Director of Globalview Capital Limited, offered a different perspective, describing the rule as a return to a system that existed years ago.

  • “This was how it used to be. High-priced stocks required 10,000 units, medium-priced stocks required 50,000 units, while lower-priced stocks required 100,000 units. So, in many ways, the Exchange is returning to a framework that operators are already familiar with,” Kebira said.

According to him, the market has evolved significantly since the rule was changed, with several companies now trading at valuations that were uncommon a decade ago.

  • “We now have stocks worth trillions of naira in market capitalization. Requiring the same volume threshold across all categories no longer reflects market realities,” he explained.

Kebira rejected suggestions that the Exchange was merely reacting to market pressure, arguing that regulatory frameworks naturally evolve as markets grow and mature.

  • “When systems are introduced, they are tested over time. If market conditions change, regulators review them and make adjustments. That is part of market development and international best practice,” he said.

What you should know:

The reform comes amid broader discussions around market liquidity, free-float requirements, investor participation, and efforts to align the Nigerian capital market with evolving global standards.

  • The proposed amendments form part of changes to Part XI of the NGX Trading License Holders’ Rules dealing with pricing methodology and price movements.
  • The framework introduces a three-tier classification system for equities based on share prices and establishes corresponding minimum trading quantities required before market prices can change.
  • Market operators expect the changes to improve liquidity and price responsiveness in high-priced equities while supporting more efficient valuation across the Exchange.

The NGX is yet to formally communicate the implementation date, although market participants expect further guidance and operational details to be released in the coming days.

As stakeholders await formal implementation, attention will remain focused on whether the new pricing methodology succeeds in improving market efficiency without compromising stability or investor confidence.