By Modupe Gbadeyanka
The management of Nigerian Stock Exchange (NSE) has disclosed that its new Equities Market Structure, which is presently under review, would become effective on Monday, July 2, 2018.
A statement issued by the stock market regulator explained that the new Market Structure would create a level playing field for all market participants and enable investors deploy broader trading strategies, enjoy best execution and benefit from enhanced market depth.
The NSE said under the new structure, opening and closing of auctions would be followed by Imbalance Sessions (where bids exceed offers, and vice versa).
“These Imbalance Sessions allow market participants enter Imbalance Orders to address imbalances from the auction sessions,” the statement explained.
It said the new structure would bring about expansion of participants in the auction period to enhance fairness and competitiveness of the price setting mechanism.
In addition, there is the introduction of the size test condition in price determination during the auction period; as it currently applies during the continuous trading session.
“Changes to the market price volatility mechanism such that daily Limit up Limit down (LULD) price band is now based on a single reference price (i.e., the previous day’s close) to allow for a symmetric up and down limit of 10 percent throughout the trading day,” the statement said.
Commenting on the new equities market structure, Chief Executive Officer of the NSE, Mr Oscar Onyema, disclosed that, “The review of the equities Market Structure was carried out to support our hybrid market model which offers the benefits of best execution and tighter spreads to investors.
“Moreover, it provides potential for cheaper cost of capital to issuers in our market. This Market Structure is in line with our 2018 to 2021 corporate strategy aimed at boosting retail investor participation.”
Adedapo Adesanya