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Nigerian bourse reviews equities market structure to improve liquidity, participation

The Nigerian Stock Exchange (NSE) has announced that it has reviewed its Equities Market Structure, which shall become effective on Monday, July 2, 2018.The NSE said in a statement on Thursday in Lagos 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.

It said that the changes to the Market Structure would include the Opening and Closing Auctions to be followed by Imbalance Sessions (where bids exceed offers, and vice versa) as these Imbalance Sessions allow market participants enter Imbalance Orders to address imbalances from the auction sessions.

It added the expansion of participants in the auction period to enhance fairness and competitiveness of the price setting mechanism as well as the introduction of the size test condition in price determination during the auction period; as it currently applies during the continuous trading session.

And 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% throughout the trading day.

Speaking on the new equities market structure, the Chief Executive Officer of the NSE, Mr. Oscar Onyema, said: “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.”

The NSE said that the details of the new Market Structure have been published in the Product Section of the NSE website,

“Other information relating to the NSE market model can be found in the NSE Equities Trading Manual which will be made available on the NSE website from July 2, 2018. The NSE remains committed to maintaining a platform that engenders a fair and efficient market in line with global standards,” the statement added.

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