New set of rules that will remarkably change how share prices move on the exchange has been worked out by the NGX Exchange to be introduced soon
The new set of rules has been gathered, will increase the existing minimum trading volume expected to trigger a stock price change.
The development which has been confirmed by reliable sources is yet to be announced by the NGX Exchange.
The effective date is also expected to be communicated by the exchange in due course. However, sources opined that the commencement period could be the beginning of the second half of the year (H2) which is also the beginning of the third quarter (Q3).
It has been gathered that 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.
Cross section of market participants says 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 stock brokers have expressed 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.
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