November 02, 2011
The Nigerian stock Exchange has proposed the following rules and initiatives which are expected to be beneficial to all stakeholders in the market and make it a gateway to the African market.
- Proposed Short Selling Rule
Participants in the Securities Lending Market must locate and borrow the stocks they wish to do sales on based on a locate requirement. Read more.
- Securities Lending & Short Selling
Security lending describes the market practice whereby securities (shares or bonds) are temporarily transferred by one party (the lender) to another (the borrower).
2.2 Difference between long and short sell:
When an investor goes long on an investment, it means that he or she has bought a stock believing its price will rise in the future. Conversely, when an investor goes short, he or she is anticipating a decrease in share price.
2.3 Why Securities Lending:
A vibrant securities market should necessary provide for lending and borrowing of securities. Securities markets all over the world, mostly, have an active market for securities lending and borrowing scheme, which beside complimenting short selling in securities also enable the investors earn returns on their idle stocks. Read More
3.Proposed NSE Security
The Nigerian Capital market has a reputation for the professionalism of the firms that participate in them and their employees. All participants in the stock lending market have a common interest in maintaining this reputation.
Participants should act with due skill, care and diligence; to this end, staff should be properly trained in the practices of the stock borrowing and lending market and be familiar with these guidelines. Read More
4. Penalties for Breaches Of The Rules Governing Dealing Members
4.1 Unauthorized Sale of Securities: In no circumstances shall a Dealing Member that sells securities without the authorization of the owner be permitted to keep any benefits accruing from such sales, including but not limited to Bonuses, Rights, Cash Dividends, Capital Appreciation, and any profit whatsoever.
4.2 Verification Of Shares In Connivance With Another: Any Dealing Member that in connivance with another verifies shares owned by any other person, shall be liable to pay a fine of N50,000
4.3 Misappropriation of Funds: Where the funds are N5 Million and below in value, be liable to return the misappropriated funds with interest at 2% above the Monetary Policy Rate.
4.4 Third Party Transactions (Sales Proceeds In The Name of Third Party): Any Dealing Member that delivers the proceeds of sale of a Client’s securities to a third party shall on demand of the client immediately buy back the client’s securities.
4.5 Maintenance of Clients’ Accounts: Failure of a Dealing Member to keep and hold all monies on behalf of Clients in a Bank Account separate from its own monies shall attract an immediate penalty of suspension from trading until such Account is opened and evidence of maintaining the account is submitted to The Exchange and a fine of N500, 000.
4.6 Appointment of a Compliance Officer: Failure of a Dealing Member to have at all times in its employment, at least one Compliance Officer: who shall be competent to advise the Dealing Member and its employees on the applications of the Rules; whose role shall be separate and distinct from the Internal Auditor or any other similar roles; and who shall be identified to The Exchange shall attract a penalty of a fine of N500,000 and immediate suspension from trading until such appointment is made and such Officer is duly introduced to The Exchange.
4.7 Rendition of Financial Statements: Failure of a Dealing Member to submit Quarterly Returns on the date due for submission shall attract a penalty of N5,000 per day of default and the Dealing Member shall be suspended from trading with effect from the first trading day after the due date.
4.8 Extension of Time For Submission Of Annual Financial Statements: Where appropriate, a Dealing Member must apply for an extension of time for submission of its Annual Financial Statements two weeks before same is due and shall be expected to give reasons for requesting the extension. Read More.
- Draft Share Buy Back Rules
An Issuer of securities may repurchase or otherwise acquire any admitted securities previously issued by it, in accordance with the Rules and Regulation of the Securities and Exchange Commission or other applicable legislation, provided always that:
5.1 The Articles of Association of the Issuer shall contain a clause authorizing the Issuer to do so;
5.2 The Issuer shall not acquire more than 15% of its issued shares;
5.3 The directors shall take a decision at a Board Meeting for the purchase of a range of shares over a period of not exceeding two years and shall fix a date for the company’s meeting for seeking the approval of shareholders. Read More
6. Listing Requirements Reviewed
The Nigerian Stock Exchange reviewed its listing requirements with Mineral Companies” (i.e. Mining, Oil & Gas) exempted from 3 year track record requirement. Company is required to produce a Competent Persons Report (CPR) describing nature and extent of the company’s rights of exploration, geographical characteristics of reserves, estimates of volume (must be in proven commercial quantities), expected extraction volume together with assumptions on forecast revenues and operating costs as well as Large cap companies with market capitalisation at IPO in excess of N500 billion may be granted a deferral or exemption from meeting the minimum public float requirement. Read More
- Proposed Company symbols
The following five symbols have been proposed with their meaning and Justification:
1. BLS- Below Listings Standard
2. ARA- Awaiting Bank/Insurance Regulatory Approval
3. CRE- Capital Reconstruction Exercise
4. RPU- Restructuring Process Underway
- New Market Segmentation
The Nigerian Stock Exchange (NSE) has launched its new market segmentation on November 1, 2011. Read More
- Proposal for Market Making On The Nigerian Stock Exchange
The Nigerian Stock Exchange considers it to be in the interest of the market that liquidity in a specified security be improved, it may enter into agreements with Dealing Member- firms one of whom shall assume the role of a Primary Market Maker for such security and the rest shall assume the role of Supplemental Market Makers.
The Nigerian Stock Exchange shall determine the minimum and maximum number of Supplemental Market Makers for a specified security. Read More
- Proposed Rules For The Listing Of Exchange Traded Funds On The Nigerian Stock Exchange
In order to be eligible for listing on The NSE, an ETF shall comply with the NSE ETF Rules, the Investments and Securities Act, the rules and regulations made pursuant to the Act, and any other Applicable Legislation.
Subject to any temporary or permanent exemption by the SEC, the Securities issued by an ETF shall be approved by the SEC prior to being listed on the official list of the NSE. Read More. Read More