Why Companies Can’t Trade Stocks Simultaneously on NASD, NGX—Ajomale
By Adedapo Adesanya
The Chief Executive Officer (CEO) of the NASD over-the-counter (OTC) Securities Exchange, Mr Bola Ajomale, has said companies cannot trade stocks simultaneously on the platform and the Nigerian Exchange (NGX) Limited.
Mr Ajomale made this disclosure at an event organised by the regulatory agency for the unlisted securities market in Nigeria in collaboration with a brokerage firm, Capital Bancorp.
When asked at the webinar attended by Business Post about the possibility of a public limited company (PLC) trading its shares on both exchanges at the same time, Mr Ajomale said it is not possible.
“Can a company list on NSE (now NGX Limited) and also trade on NASD?” one of the participants asked at the programme held precisely in July 2020, and Mr Ajomale emphatically responded, “No, no.”
When pressed further to explain the main reason an issuer is not allowed to trade a security at the two exchanges at the same time, he said, “We believe that there is a lot of work to be done for the capital market to deepen it, our purpose and objective is not to trade what is already trading; our purpose and objective is to create transparency around securities that do not have a market.”
“I don’t think we (NASD) will be adding the value that we are supposed to add if we are trying to create a market for Unilever [Nigeria] and GTBank (now GTCO) when it already has an established market.
“Essentially, what we would be doing is encouraging arbitrage between the two markets, which will just be confusing.
“However, we have developed 40 companies now that did not have a market before and there are many more that do not have a market yet that we are trying to bring in. We will not be expanding the market, therefore, if all we needed to do was to go and replicate what is already trading.
“It is deliberate that we are not trying to steal or copy what is in the market, we are trying to create a new market for new securities,” the NASD chief further explained.