Stricter Rules Proposed for Large Trades on NGX
The Nigerian Exchange Limited (NGX) has introduced a proposal to tighten regulations on block divestments and large-volume trades to bolster market transparency and accountability.
Key Changes in the Proposal
1. Lower Threshold for Block Divestments:
• Previously, trades involving 30% of a company’s listed shares were classified as block divestments.
• Under the new rules, this threshold has been reduced to 5% within a one-year period.
2. Approval Requirement for Large Trades:
• Any trade involving 80 million units of shares or valued at ₦800 million or more within a year will now require written approval from the NGX before execution.
• Failure to obtain approval may lead to such transactions being classified as large-volume trades, making them subject to stricter compliance rules.
3. Cumulative Trade Patterns Monitored:
• Transactions structured to bypass thresholds through multiple trades will be flagged and treated as a single block divestment or large-volume trade.
️ Why the Changes?
According to Olufemi Shobanjo, CEO of NGX Regulation Limited, the updates aim to:
• Close loopholes that allow market participants to evade disclosure.
• Reinforce compliance, ensuring all significant share transfers are fully transparent.
• Protect market integrity by monitoring impactful changes in shareholder structures.
Stakeholder Feedback Invited
The NGX has called on trading licence holders and market stakeholders to share their feedback on these proposals, which are part of amendments to the Trading Licence Holders Rules (Part XIIIA).
What It Means for the Market
• Improved transparency in share transactions.
• Enhanced NGX oversight on trades affecting shareholder dynamics.
• Potential increase in market confidence among domestic and foreign investors.
The Nigerian Exchange Limited (NGX) has introduced a proposal to tighten regulations on block divestments and large-volume trades to bolster market transparency and accountability.
Key Changes in the Proposal
1. Lower Threshold for Block Divestments:
• Previously, trades involving 30% of a company’s listed shares were classified as block divestments.
• Under the new rules, this threshold has been reduced to 5% within a one-year period.
2. Approval Requirement for Large Trades:
• Any trade involving 80 million units of shares or valued at ₦800 million or more within a year will now require written approval from the NGX before execution.
• Failure to obtain approval may lead to such transactions being classified as large-volume trades, making them subject to stricter compliance rules.
3. Cumulative Trade Patterns Monitored:
• Transactions structured to bypass thresholds through multiple trades will be flagged and treated as a single block divestment or large-volume trade.
️ Why the Changes?
According to Olufemi Shobanjo, CEO of NGX Regulation Limited, the updates aim to:
• Close loopholes that allow market participants to evade disclosure.
• Reinforce compliance, ensuring all significant share transfers are fully transparent.
• Protect market integrity by monitoring impactful changes in shareholder structures.
Stakeholder Feedback Invited
The NGX has called on trading licence holders and market stakeholders to share their feedback on these proposals, which are part of amendments to the Trading Licence Holders Rules (Part XIIIA).
What It Means for the Market
• Improved transparency in share transactions.
• Enhanced NGX oversight on trades affecting shareholder dynamics.
• Potential increase in market confidence among domestic and foreign investors.