Excitement as NSE Pricing Methodology Kicks Off
By Modupe Gbadeyanka
The new pricing methodology and par value rules have triggered excitement among stakeholders in the Nigerian capital market.
The new pricing method took effect from Monday, January 29, 2018.
It was put in place to improve liquidity, narrow spreads and ensure that all price-improving transactions had material impact.
Analysts say the new policies will support more efficient price discovery and liquidity improvement on the exchange.
With the new price method, the price floor for stocks listed on the Nigerian Stock Exchange (NSE) now stands at N0.01 from a previous floor of N0.50 per share.
In addition, the minimum tick size would no longer be N0.01 per share across all stocks, but would be determined by the price of the stock; N0.10 for stocks above N100.00, N0.05 for stocks between N5.00 and N100.00, N0.01 retained for stocks between N0.01 and N5.00.
The amendment to minimum trade volume to move the price of a stock will also commence yesterday: 100,000 units from the previous 50,000 units for stocks below N0.01; 50,000 units, same with previous for stocks between N5.00 and N100.00; 10,000 units also unchanged for stocks above N100.00.
At the close of business yesterday on the floor of the NSE, four equities, which before now traded at 50 kobo per share, fell below the former mark.