Why NGX postponed launch of new Shares Pricing Methodology

The Nigerian Exchange (NGX) has delayed the planned August launch of its new Shares Pricing Methodology due to concerns raised by market participants about the simultaneous implementation of multiple reforms. These include the transition to a T+1 settlement cycle and investor preparation for the Dangote Refinery's N2.15 trillion IPO.

Capital market operators argued that the overlapping reforms could complicate the implementation process. The Securities and Exchange Commission (SEC) has instructed NGX to hold broader stakeholder consultations for approximately three months before proceeding. NGX's Head of Corporate Communications, Clifford Akpolo, declined to comment at this time, stating they would provide further information.

The new pricing methodology aims to address liquidity and price-discovery challenges caused by highly valued equities. However, David Adonri, CEO of Highcap Securities Limited, stated that the existing methodology is still suitable for highly valued stocks. Concerns about the timing arose due to the volume of reforms the market is facing.

The Dangote Refinery IPO, scheduled for September 14, added another layer of complexity to the situation. Aruna Kebira, CEO of Globalview Capital Limited, highlighted the sensitivity of the timing, noting that lowering the price threshold for moving large-cap stocks could lead to increased price volatility as significant foreign capital enters the market.

The decision to postpone the launch remains uncertain, as it may eventually be implemented given its importance as a market-microstructure reform.