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Exchange council approves new rules for brokers

By The Citizen

The Council of the Nigerian Stock Exchange (NSE) has approved many new rules and made amendments to the rules governing dealing members.

In a notification entitled: Additions and amendments to rules and regulations governing dealing members and invitation for comments, sent to licensed stockbrokers, the NSE indicated that the new rules included the order entry and execution rule, obvious error rule and churning, fictitious or deceptive trading pattern rule.

Head, Legal and Regulation, Tinuade Awe, said the Exchange embarked on the review of its rules and regulations in order to improve them to international standards.

According to her, the NSE strives to create a globally competitive market by enacting provisions that enhance the transparency of its operations - through which it aims to sustain and promote stakeholder confidence in the Nigerian capital market.

She, however, added that the rules and amendments are subject to the approval of the Securities and Exchange Commission (SEC).

Part of the new rules included article 87, which contains amendments to trading parameters and now makes provisions for lot sizes and display of quotes and orders.

Also, Article 88, which contains amendments to trade types, makes provisions for order entry parameters, entry of limit and market orders, contents of orders, time-in-force limit orders while it also provides for time stamping of orders for ranking and then processing of orders.

A major amendment under Article 90 makes provision on suspension of trading. The Chief Executive Officer of the NSE is empowered to halt or suspend trading when he deems such action necessary or appropriate to the maintenance of a fair and orderly market or for the protection of investors, or otherwise in the public interest. However, the chief executive officer must notify the council of the Exchange as soon as possible.

A new rule under Article 95A provides procedures for dealing with obvious errors. The new rule empowers the NSE to cancel or adjust transactions that arise out of obvious errors, cancel or adjust pending bids and offers in that regard or halt trading in one or more securities pending the resolution of an obvious error.

Article 100 contains amendments to the provision on pricing methodology and provides that securities shall trade in price increments of one kobo. It also makes provisions for determining the opening and closing prices of securities on any trading day, price movements and price limits; and small trades.

Besides, the NSE amended provision on fine for unauthorised sale of securities by imposing much larger fines to deter unethical practices among dealing members. In addition to the larger fines, a dealing member, which has previously engaged in unauthorised sale of securities, shall also have its dealing licence withdrawn by the council of the Exchange.