Experts commend new share pricing regime of NSE



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

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

The experts, in separate interviews with the News Agency of Nigeria (NAN) in Lagos, said method would also enable investors to categorise stocks on the NSE.

NAN reports that new pricing method was started on Monday, Jan. 29.

Prof. Sheriffdeen Tella, Professor of Economics, Olabisi Onabanjo , Ago-Iwoye, Ogun said NSE 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 adhere to global best .

Tella said that the method be well implemented to no one in doubt about a particular stock.

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

Uwaleke said that the NSE needed to be in conformity with global best in terms of rules and regulations.

He, however, called for proper implementation of the new method to achieve the desired results.

NAN reports that Mr Abimbola Babalola, NSE Head of Market Surveillance and , 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 .

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 .

According to him, Group A, shall consist of large-cap equities that are priced at 100 per share or above for at least four of the last six trading months, or new security listings that are priced at 100 or above.

Group B, shall consist of medium-priced equities that are priced at 5 per share or above, but less than 100 per share for at least four of the last six months, or new security listings priced at 5 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 5 per share, or new security listings priced at one kobo at the time of listing on the NSE. (NAN)