Access Bank, UBA drive activity with 174.3m traded shares; as NSE moves to alter price methodology

A turnover of 320.9 million shares exchanged in 4,524 deals was recorded in the Monday’s trading as the banking subsector of the financial services sector was the most active (measured by turnover volume) with 174.3 million shares exchanged by investors in 1,675 deals.
Volume in the subsector was largely driven by activities in the shares of Access Bank Plc and UBA Plc. Premium subsector boosted by activities in the shares of FBNH Plc and Zenith Bank Plc followed with a turnover of 40.62 million shares in 703 deals.
The number of gainers at the close of trading session was 27, while decliners closed at 24. Conoil Plc led the gainers’ table with a gain of 10.23 per ent to close at N21.01 per share, while Oando Plc followed with 10.02 per cent to close at N5.82 per share. UBA Plc added 9.37 per cent to close at N3.97 per share. On the other hand, MRS Plc led the price losers’ table, dropping 9.74 per cent to close at N36.53 per share. Vitafoam Plc followed with 9.59 per cent each to close at N4.90 per share.
In a related development, the Nigerian Stock Exchange (NSE) is proposing amendments to Rule 15.29: Pricing Methodology, Rulebook of the Exchange, 2015. Rule 15.29 currently prescribes the process by which the prices of equity securities may be determined, and the minimum price movement for equity securities listed on the Exchange. Rule 15.29(a), states, ‘Securities shall trade in price increments of one (1) Kobo.’
This is a ‘one size-fits-all’ price movement or tick size for all equity securities. A tick size is the minimum price movement by which the price of a trading instrument can change. Empirically, a very small ‘one size-fits-all’ tick size can increase the risk of undue advantage for front-runners, as well as other erroneous trading practices. In such instances, the liquidity providers, for instance, Market Makers and Institutional investors may be reluctant to submit limit orders, leading to a thin order book.
It is global best practice for Exchanges to set price movements for securities in a manner, which simplifies trading and promotes liquidity. The role played by price movements in every market structure, and its particular influence on the liquidity and trading momentum cannot be over emphasised.
According to a notice obtained from the NSE’s website, the Exchange has considered the constraints of the current definition and practice of ‘one size-fits-all’ price movement (One (1) Kobo) for all equity securities trading on the Exchange and has researched the tick size regulation in other leading jurisdictions.
The inquiries according to General Counsel/Head of Regulation of NSE Tinuade Awe, revealed that most advanced markets do not adopt a ‘one size-fits-all’ tick size for all equity securities. Consequently, The Exchange is proposing amendments to Rule 15.29: Pricing Methodology that the classification of equities into groups for calculating price movements and price limits shall be as follows:
Group A: equities priced at N100.00 per share or above. Group B: equities priced at N5.00 per share or above but less than N100.00 per share and group C: equities priced at N 0.01 per share or above but below N5.00 per share. The Exchange proposed that minimum quantity of equities traded that will change the published price of an equity security shall be as follows: Group A: Ten Thousand (10,000) units (presently 50,000 units). Group B: Fifty Thousand (50,000) units (presently, 10,000 units) and group C: One Hundred Thousand (100,000) units (newly introduced).