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Experts commend share pricing regime of NSE

Financial experts have commended the new share pricing method of the Nigerian Stock Exchange (NSE).

They said the new regime would allow share prices to trade as low as one kobo and boost inflow of foreign investments.

The experts said the method would also enable investors to categorize stocks on the NSE.

The new pricing method was started on Monday, Jan. 29.

Professor of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun, Sheriffdeen Tella, said that the NSE must of necessity update its pricing method from time to time for trading to be transparent.

He said that for any stock exchange to attract foreigners to participate in its trading and invariably in the economy, it must adhere to global best practices.

Head of Banking and Finance Department, Nasarawa State University, Keffi, Dr Uche Uwaleke, said that inflation and depreciation of the naira had made the new pricing method imperative.

Mr Abimbola Babalola, NSE Head of Market Surveillance and Investigation, said that the new method was “aimed at improving liquidity, narrowing spreads and ensuring that all price-improving transactions had material impact.”

Babalola said the new rules would effectively remove the current rule which placed minimum allowable price for any stock to trade at its nominal value, irrespective of the market forces.

He said that as a result, stocks would be under new groupings and pricing rules and that price of every share listed on the NSE would be determined by market forces.

According to him, Group A, shall consist of large-cap equities that are priced at N100 per share or above for at least four of the last six trading months, or new security listings that are priced at N100 or above.

Group B, shall consist of medium-priced equities that are priced at N5 per share or above, but less than N100 per share for at least four of the last six months, or new security listings priced at N5 per share or above at the time of listing.

Group C, where majority of listed companies fall, shall consist of equities that are priced at one kobo per share or above, but below N5 per share, or new security listings priced at one kobo at the time of listing on the NSE.

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