The Nigerian Exchange Limited has reinstated elements of its 2018 market microstructure rules, bringing back a pricing methodology that affects how high priced stocks move on the trading floor.
Under the revised framework, equities trading at ₦1,000 and above will require a minimum transaction of 10,000 shares before their prices can change. The threshold mirrors the treatment previously applied to Group A equities under the Exchange’s 2018 market microstructure regime.
The move represents a departure from the pricing framework adopted in subsequent years after the Exchange moved away from the segmented market structure. By restoring the earlier methodology, the NGX is seeking to ensure that price changes in premium priced stocks are supported by larger trading volumes rather than small transactions capable of triggering disproportionate price movements.
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Market microstructure rules determine how orders are matched, how prices are adjusted and the volume of shares required to influence market prices. Analysts note that higher volume requirements for expensive stocks can reduce excessive volatility and contribute to a more orderly price discovery process, particularly in a market where liquidity is unevenly distributed across listed companies.
The change comes at a time when the Nigerian equities market has experienced heightened activity, with market capitalization surpassing ₦160 trillion in May before retreating amid profit taking in early June. Investors and market operators will be watching closely to assess whether the return to the 2018 pricing methodology improves market depth and enhances confidence in the valuation of high priced equities.
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