The Nigerian Exchange Limited (NGX) has announced proposed amendments to the rules governing trading license holders, focusing on block divestment and large volume trades. The aim is to strengthen transparency and compliance while addressing risks associated with structured trades that may bypass existing regulations.
In a statement released over the weekend, the NGX explained the background and objectives of the amendments. It noted that the current rules, introduced on February 12, 2018, guide the monitoring and reporting of share transfers that could significantly impact the daily trading volume or alter the shareholding structure of listed companies.
“However, in reviewing applications and monitoring such trades, The Exchange has observed that certain market participants may be structuring trades to circumvent the Rules’ disclosure and compliance requirements,” the NGX stated.
Enhancing Transparency
The proposed amendments aim to address these challenges by ensuring that trades, especially block divestments and large volume transactions, adhere to strict disclosure and compliance standards. These trades are crucial as they often involve significant changes in ownership that could impact market stability and investor confidence.
Stakeholder Input
To refine the proposed amendments, the NGX is seeking comments from stakeholders, emphasizing the importance of public participation in shaping the final rules. The statement read:
“We are involving as many stakeholders as possible in this commentary process to achieve a robust, well-written set of Rules. Your comments will be considered in arriving at the final text of the Rule amendments.”
This process underscores the NGX’s commitment to inclusivity and transparency in decision-making. Feedback from stakeholders will help ensure the rules are comprehensive and aligned with the needs of the market.
Approval Process
The proposed amendments will undergo review and approval by the NGX Regulation Committee Board and the Securities and Exchange Commission (SEC). This multi-tiered review process ensures that the changes meet regulatory and market standards.
Objectives of the Amendments
The Exchange highlighted its objectives for the proposed amendments, including:
- Raising public awareness about the rule changes.
- Soliciting feedback to enhance the quality of the proposed rules.
- Addressing loopholes and ensuring compliance with market regulations.
Broader Implications
These amendments reflect the NGX’s proactive approach to maintaining a fair and transparent trading environment. By closing potential loopholes and improving compliance, the NGX aims to bolster investor confidence, enhance market integrity, and support sustainable growth in Nigeria’s capital market.
As the commentary process unfolds, the NGX is calling on stakeholders to provide meaningful input to ensure the proposed changes reflect the diverse interests of the market.
