Public & Private Offers | |
Public & Private Offers | |
5330 VIEWS | |
![]() |
Tuesday, May 21, 2019 / 06:27AM / NSE Press Release /
Header Image Credit: WebTV
The attention of The Nigerian Stock Exchange (NSE or The Exchange) has
been drawn to a few critical issues raised in various print and social media
platforms regarding the listing of MTN Nigeria Communications Plc (MTN Nigeria)
on the Premium Board of The Exchange. As an Exchange that is committed to
operating a fair, orderly and transparent market, we deem it important to
clarify these issues.
Paucity
of MTN Shares on the Floor
MTN
Nigeria Listed by Introduction. Where a company lists following an
Initial Public Offering, shares are expected to be available for trading on the
day of listing. In a Listing by Introduction, however, no shares have
been offered for subscription by the company prior to listing. Thus,
without any intervention, it is possible that there will be no shares available
for trading on the listing date. Indeed, currently, no rule of The Exchange
compels shareholders in a listed company to tender their shares for
trading. Shareholders are at liberty to trade their shares at any time
and price suitable to them. Thus, in order to stimulate trading in the
shares of companies that List by Introduction, the NSE’s practice is to urge
the company to make shares available on the day of listing. In the case
of MTN Nigeria, the NSE had requested the Company as part of the listing
process to make shares available and The Exchange expects the company to do
that.
Since
the listing of MTN Nigeria on Thursday, May 16, 2019, a total of 105,301,759
shares valued at N12,231,997,316 have traded in three (3) days. These trades
were carried out by ten (10) Dealing Member Firms in 134 cross deals/negotiated
deals.
According
to the Rulebook of The Exchange, when a Dealing Member or Authorized Clerk has
an order to buy and an order to sell the same security at the same price, the
Dealing Member or Authorized Clerk may “cross” those orders at a price at or
within The Exchange’s best bid or offer. A variant of this is the
negotiated deal, which describes a situation where a cross deal is executed
between two Dealing Member Firms at a price which may be within The Exchange’s
best bid or offer or with the approval of The Exchange, outside the best
bid or offer.
Because
cross deals involve clients of the same Dealing Member Firm on both sides of a
trade, significant issues have been raised that Dealing Members who have not
been involved in the cross deals have been unable to trade on behalf of their
clients. The Exchange is not unconcerned about this state of
affairs. Indeed, Council members of The Exchange urged brokers to discuss
with their clients about possible sales of shares.
As
an Exchange that champions transparency and equity for all stakeholders in our
market, we have received stakeholder feedback concerning our present rules on
cross dealing and will consider the issues raised as part of our sustained
efforts to ensure our market remains equitable for all stakeholders. We believe
in market forces as the most efficient methodology for price discovery.
Demand and supply will interact to discover appropriate prices as trading
activities continue in the market.
MTN
Nigeria’s Free Float Valuation
There
appears to be a misconception that a concession was given to MTN Nigeria
on the minimum free float required for companies listed on The Exchange.
According
to Rulebook of The Exchange, free float is defined as the number of shares that
an Issuer has outstanding and available to be traded on The Exchange. It includes
all shares held by the investing public, and excludes shares held directly or
indirectly by promoters, directors and their close relatives; strategic
investors holding five percent (5%) and above of the issued share capital; or
government.
The Exchange’s rules for listing on the Premium Board (which is the board in which MTN Nigeria is listed) require a Company to have a minimum free float of twenty percent of its issued share capital or that the value of its free float is equal to or above N40 billion on the date The Exchange receives the Issuer’s application to list. MTN Nigeria met with the free float requirement of N40 billion. The free float of MTN at the time of listing was in excess of N90 billion. Our rules are readily available on the website of The Exchange at www.nse.com.ng.
Investor
Protection Focus
Investor
protection is very important to us at The Exchange and we have taken necessary
steps to ensure that our market is fair and orderly. In 2016, we acquired
NASDAQ’s SMARTS platform to proactively detect and deter manipulative
tendencies, gather intelligence and execute risk based supervision of flagged
participants.
We
have also implemented other initiatives aimed at providing investors with timely
information on the compliance status of our Dealing Members and Issuers
including BrokerTrax, our member compliance report, and Compliance Status
Indicator (CSI) codes (for Issuers). In addition, we have institutionalized our
investor education program and launched X-Academy in June 2017, because we have
identified investor education as a veritable tool to galvanizing informed
investments and necessary step towards protecting investors in our market.
Whilst
we believe we have addressed the concerns raised, we will like to assure our
stakeholders and the general public that The Exchange will continue to uphold
global best practices in its business operations and will sustain engagement
with its stakeholders to continually develop regulatory frameworks that ensure
our market completely reflects our values of ambition, fairness and inclusion.
Editor’s Note:
This post was updated at 11.48AM, Tuesday, May 21, 2019 to reflect revised release seen on the NSE.
Related News
1. Nigeria Stock Exchange Admits MTN Nigeria Communications Plc to its Premium Board
2. A Fool’s Guide to the MTN Nigeria’s 2019 Public Listing
3. MTN Nigeria Receives Approval To List On The Premium Board Of NSE; Listing To Proceed On 16th May
4. MTN Q1 2019 Conference Call; Key Takeaways, Management Keeps Firm Hand on Profit Machine
5. MTNN Q1 2019 Analyst Presentation
6. Extracts For MTN Nigeria From The Group Quarterly Statement Update for Period Ended March 2019
7. MTN VS AGF: Court Rejects AGF Preliminary Objection
8. MTN Nigeria Sues FGN and AGF For N3billion
9. SEC Nigeria Confirms Receipt of MTN Application for Registration of Securities
10. MTN Announces Conversion From A Private Company To A PLC
11. MTN to List On the NSE Before End of H1, 2019
12. MTN Nigeria Releases Financial Results For The FYE Dec 31, 2018; Plan To List on NSE By H1 2019
13. MTN Nigeria Resolves Amicably Issues Relating to Foreign Exchange Remittances
14. Providing Reliable Connectivity for Businesses: MTN Delivers Cutting Edge Solutions to NNPC
15. Reports Indicate That Nigeria’s Central Bank and MTN Reach Tentative Agreement On $8bn Fines
16. MTN Ghana Successfully Completes Its Initial Public Offer
17. MTN Nigeria – Interim Financials For H1 2018
18. Neither MTN Nigeria Nor Any of Its Advisers Has Filed Any IPO Application With SEC Nigeria
19. MTN Ghana Launches Mobile Money Based IPO
20. MTN Nigeria IPO Teaser – Listing and Precursory Information
21. MTN Nigeria To List On The NSE; A Promise Fulfilled – OTC Equity Research