SEC approves new NSE trading rules

The Nigerian Stock Exchange (NSE) has recently announced that it has received approval from the Securities and Exchange Commission (SEC) to implement new trading rules aimed at enhancing efficiency and transparency in the stock market. The changes are part of an ongoing process to improve the exchange's platform, trading activities, fairness, and overall market projection. Ayodeji Ebo, Managing Director of Afrinvest Securities Limited, joined CNBC Africa to discuss these new developments and review the recent trading trends in Nigeria's equities market. One of the key rules that have been approved by the SEC focuses on security transactions within dealing members. This rule addresses the process of undoing transactions from one house to another, particularly during periods of high market volatility. Additionally, the new rules also introduce specific requirements for free floating shares, grouping them into different categories based on market value and shareholder numbers. Companies listed on the premium board, such as MTN Nigeria, will need to comply with a minimum free float percentage, number of shareholders, and total market value to ensure fair trading practices. The introduction of rules for growth stocks and start-up companies is another significant development. These rules aim to provide a framework for new companies seeking listing on the exchange, ensuring that while opportunities are available for start-ups, there are also guidelines in place to manage risk effectively. Overall, the new rules are designed to promote fairness, competitiveness, and confidence in the market, driving increased participation and investment. Reflecting on the recent bullish run in the market, which saw a significant 8% increase, Ebo highlighted the role of key stocks like MTN Nigeria and industrial sector companies in driving the market rally. While acknowledging the positive impact of these major stocks on market performance, Ebo cautioned against being solely swayed by their movements. He emphasized the need to assess market sentiment holistically, considering factors beyond the performance of individual stocks. In particular, the surge in MTN Nigeria's share price, driven by factors like dividend payouts and increased investor interest, has contributed to the recent market excitement. However, Ebo noted that maintaining a balanced view of the market, beyond the influence of specific stocks, is crucial for sustaining long-term growth and stability. He also highlighted the positive effects of MTN's listing on market engagement, attracting new investors and diversifying trading opportunities. Despite the recent favorable market conditions and the excitement surrounding key stocks, Ebo underscored the importance of maintaining a cautious approach and not getting carried away by short-term gains. He urged investors to look beyond the current market trends and focus on long-term growth prospects, while also emphasizing the need for continued transparency, fairness, and regulatory compliance to ensure a robust and sustainable market environment. In conclusion, the approval of new trading rules by the SEC signals a positive step towards enhancing market efficiency and transparency in the Nigerian Stock Exchange. As the market continues to evolve and adapt to changing dynamics, these rules will play a crucial role in shaping the future of trading practices and fostering a conducive environment for investors and stakeholders alike.