Nigerian Stock Exchange sets new rules.
May 12th, 2008 Tunde Brown || tunde.brown@stockmarketnigeria.com
By Tunde Brown
The Nigerian Stock Exchange has come of age, and like any institutional body in the 21st century, is subject to some form of evolution. New developments emerge in the face of the increasing need and desire of institutional and individual investors to enhance and maximize wealth. However, a lot of the times, these developments rarely make for healthy and fair market practices. I recent times, players have had to thread carefully as issues that threaten the security and sustainability of their interest confront them, requiring some measure of caution in every planned move.
In an attempt to pre-empt circumstances that would threaten the credibility of the Nigerian Stock Exchange, the management recently made public a set of new rules aimed at reducing to the barest minimum the growing incidents of unwholesome practices in the market in an attempt to restoring it to its medium and long term objectives, as against the current short term driven approach. Amongst some of the new rules is the compulsion on any newly listed company to trade at least 10 per cent of its shares on the day it is being listed. Such new entrants would now also require a twelve (12) months post-listing period of operation before it can be allowed to make new issues available for subscription. Furthermore, for any listed stock on the NSE to record price appreciation or depreciation, a minimum of 100,000 units of such stock must be traded on the particular day.
While some operators have reacted to the development, noting that it is a bit o the high side, others have opined that this new development would ‘stabilize the market and make investors fall back on the fundamentals, instead of the bandwagon approach currently being witnessed.’
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