•Lifts restrictions on price movements

By Eromosele Abiodun, Thisday, 10.27.2010

In a bid to boost liquidity and attract more foreign investors, the Nigerian Stock Exchange (NSE) is putting final touches to plan to lengthen its trading hours, Interim Director General, Emmanuel Ikazoboh, has said.

 

Ikazoboh, who made this known in an interview with Reuters yesterday, also said the exchange intends to loosen restrictions on share price movements in the next three weeks.

 

He said the exchange was considering lengthening its trading day by two to three hours and double the limit on daily share price movements to 10 per cent in a bid to boost volumes.

 

The NSE currently maintains a five per cent cap on individual stock movements and trades for just three hours between 9:30am and 12:30pm daily.

 

The Nigerian equities market, which trails only Johannesburg Stock Exchange (JSE), South Africa and Cairo Stock Exchange (CSE), Egypt, in Africa, was at some point rated one of the world’s best performing emerging markets, but weak regulation and low liquidity levels have hindered its development in recent times.

 

Ikazoboh said the five per cent cap on individual stock movements had “drastically” reduced liquidity, while a trading day, which ends at around 12:30 local time (1130 GMT) shut out US and other foreign investors.

 

“Within the next three weeks, I believe the case of the price cap and the number of hours trading will be determined. Papers have been prepared, we just need the (stock exchange) council and the Securities and Exchange Commission (SEC’s) approval,” he said.

 

Ikazoboh disclosed that the NSE was in talks with South Africa’s Absa Capital about listing an exchange-traded fund (ETF) in the market.

 

“We are in discussion with Absa Capital who are thinking of coming to list an ETF, which will be securitised by gold in southern Africa. As soon as the SEC gives approval, before the end of the year, we would list the ETF,” he said.

 

The NSE boss added that the exchange was working towards having African stock exchanges integrate to create economies of scale, adding that demutualisation would be “on the front burner” from next year.

 

“Since most of the other players like the South African stock exchange, the Egyptian stock exchange are all demutualised, it’s natural that for us to go into that integration process,” he said.

 

Diversifying an equities market dominated by banking is also key to attracting new investment. He said more than 250 companies were seeking to list, including ones from the telecoms, energy, and manufacturing sectors.

 

Ikazoboh, former head of Deloitte [DLTE.UL] in West and Central Africa, was named interim manager of the NSE last August. The SEC had removed his predecessor, Prof. Ndi Okereke-Onyuike, over allegation of inadequate stock market supervision and financial mismanagement. Although his tenure is limited (?), it is expected that a new permanent director general would be in place by the end of the year.

 

 

Source: Thisday