The Nigerian Exchange (NGX) has introduced new rules that will significantly alter how share prices move on the exchange by setting minimum trading volume thresholds before prices can change, according to information obtained by Nairametrics from multiple market sources.
Three independent stockbrokers and traders familiar with the development confirmed the new framework to Nairametrics, although the NGX is yet to make a formal public announcement.
The effective date is also expected to be communicated by the exchange in due course.
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.
Market participants say 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 traders are already expressing 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.
Nairametrics understands that further details, including implementation guidelines and the commencement date, are expected to be released by the NGX in the coming days.
This is a developing story and will be updated as more information becomes available.
