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Price movement: NSE’s 10% ceiling for all stocks

By on March 26, 2013

The Nigerian Stock Exchange, NSE, will extend the 10 per cent ban on share price movement to include other stocks not covered by the market makers by April, said Ade Bajomo, Executive Director, IT and Market Operations, NSE.

He made the disclosure while briefing capital market correspondents on recent developments in the market.

Bajomo also disclosed that supplementary market makers would commence operation on  April 2, 2013 after the applications received from 23 interested parties must have been screened and approved for the purpose.

The NSE had in September, 2012, while introducing market making programme, lifted the five per cent ban on share price movement of stocks in the portfolio of market makers top 10 per cent to allow for more activity in the stocks.

Stock exchanges around the world introduce circuit breakers to maintain sanity in the market and to ensure that a particular stock does not go uncontrollably to one direction. Whenever the price of a stock increases or declines beyond a specified threshold it is said to have entered into a circuit. So, the circuit breaker is needed to halt the unwarranted movement.

Bajomo said, “We did say when we introduced the limit up, limit down that we are going to vivificate it and actually look at the statistics to determine what the next step is going to be.

In fact, the initial attempt was to do that for all stocks, but the feed back we got was we should do it stage by stage and that is what we have done and I think the market reacted positively to that. So, we actually expect that to kick off come next month.”

On the supplemental market making programme, he explained that interested applicants would be required to list the stocks they intend to make market in and how they intend to go about it.

According to him, applicants would be required to have N250 million net liquid capital to participate, adding that a supplemental market maker could apply to be upgraded to a primary market maker if its role in supplementary capacity was satisfactory.

He stated that they would enjoy 50 percent fee waver during the role out period.