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Nigerian Stock Exchange Announces New Capital Market Initiatives

By on October 24, 2011
In line with the vision of the DG of The Nigerian Stock Exchange (NSE) to increase the market cap of the bourse to US $ 1 Trillion in less than five years, the Nigerian Stock Exchange has announced that it will be reorganizing the capital markets in order to remove impediments to market growth, and increase operator and investor confidence.
According to a release by the NSE, the improvements are being carried out in order to make Nigeria, “the gateway to African Markets”.
The initiatives are part of a broader NSE 2011 Key Initiatives and are largely centered on market segmentation or better organizing the securities into refined classifications.
The NSE intends to conform to global standards such as:
• Global Industry Classification System (GICS)
• North American Industry Classification System (NAICS)
• Australian and New Zealand Standard Industrial Classification (ANZSIC)
• Standard Industrial Classification (SIC)
Also the current structure of the Stock Exchange will be streamlined into two categories namely equities market and bonds market. The equities market is to be classified further into the Main Board and the Alternative Securities Market (AseM).
Furthermore the hitherto myriad sectors of the NSE numbering thirty-three will now be streamlined into twelve new sectors.
The initiative also changes the way listed companies are classified according to market capitalization. Under the new regime of classifications, small caps (companies with small market capitalization) will be companies that have a market cap of less than US $150 Million, Mid Caps (companies with medium market capitalization) will be stocks that have a market cap of greater than US$ 150 Million but not above US$ 1 Billion.
Presently most stocks on the NSE fall into the mid-cap range; Dangote Cement is an example of a large market cap stock as it has a market capitalization of over US$ 1 Billion.
According to the Nigerian Stock Exchange, the new changes will take effect from November 1st 2011.