NGX to Revamp Rules Guiding Corporate Listings

Apparently concerned with the dearth in listings in the capital market, the Nigerian Exchange Limited (NGX) has announced it is working on revamping the rules to listings on its platform.

This, it said, is part of a broader strategy to strengthen the capital market and have positive implications for the overall economy, including increased revenues and a more vibrant market ecosystem.

Jude Chiemeka, Chief Executive Officer, disclosed this during a panel session of the launch of Afrinvest 2024 Banking Sector themed; Recapitalisation: Catalyst for a $1 trillion Economy? which held recently in Abuja.

Chiemeka noted that the exchange’s focus on revamping listing rules and encouraging more companies to go public is part of a broader strategy to strengthen the capital market.

He noted that as more companies list, the market capitalization is expected to grow, providing more investment opportunities and potentially leading to more robust economic indicators. He added that the growth will also make the market more attractive to foreign investors, further increasing liquidity and market stability.

“In terms of overall implication for the stock market, we trade $6 million a day which is really significantly small judging from the size of our economy. The equities market to GDP is about $35 billion, that we believe that with this recapitalization, we will see a lot more companies coming to list as it would not be all about banks recapitalizing.

We are working on revamping the rules to listings. The Securities and Exchange Commission (SEC) is aware and is committed to that process to encourage more listings and so we think that recapitalization of banks will see more companies listed. Today, we have traded close to $951 million in terms of secondary trading. This also speaks to the fact that people who are investing now will have access to a solid secondary market. We believe that with the cooperation of the SEC who have been helpful, the market will be in for a good time”, Chiemeka explained.

Explaining the role the NGX has played in enabling banks realize the lofty targets for banks under the recapitalization directive by the Central Bank of Nigeria (CBN), he stated that the exchange has made significant strides in incorporating digital technology to streamline and democratize capital raising processes.

According to him, this initiative, supported by the SEC, aims to reduce the costs and increase the speed of issuing securities.

“By doing so, banks and other companies can efficiently access capital markets, potentially leading to increased liquidity and market participation. The digital platform is particularly beneficial for retail investors, offering them easier access to the market and more opportunities to participate in capital raising activities.

This shift is critical, especially considering the historical context where retail investors suffered during the last major bank consolidation in 2005. The introduction of products like derivatives further helps in de-risking investments, making the market more attractive to retail investors”, the NGX CEO said.