Nigerian Exchange to Propose Stricter Rules for Block Divestments, Large Trades
The Nigerian Exchange Limited (NGX) has proposed amendments to its Trading Licence Holders Rules which deal with Block Divestments and Large Volume Trades.
The new proposal aims to tighten regulations around large share transfers and acquisitions, under the new rules, a transaction will be considered a block divestment if it involves the transfer of at least five percent of a company’s total listed shares, down from the previous threshold of 30 percent.
Additionally, any transfer or acquisition amounting to five percent or more within a one-year period will be monitored closely, and if a pattern of continued transactions is identified, they may be treated as a block divestment at the discretion of the exchange.
The proposed changes also include new requirements for large-volume trades. Specifically, transactions involving the transfer of 80 million or more shares, or a trade value of at least N800 million, within one year, will require prior written approval from the exchange. If such trades occur without the exchange’s approval and exhibit a pattern suggesting an ongoing process, the transactions could be classified as large-volume trades and subject to the relevant rules. These amendments are intended to provide greater oversight and ensure that significant transactions are fully disclosed to the market.
The NGX explained that the rule change is a response to potential loopholes observed since the original rules were implemented in 2018. Market participants have sometimes structured trades in ways that bypass the disclosure and compliance requirements, which could undermine the integrity of the exchange. By lowering the thresholds for block divestments and large-volume trades, the NGX aims to close these gaps and enhance market transparency. The changes will make it more difficult for participants to avoid scrutiny while ensuring that large transfers are fully visible to regulators and market participants.
Overall, the NGX believes the proposed amendments will improve its ability to monitor shareholder changes and maintain market integrity. By tightening the rules around significant share transfers and acquisitions, the exchange hopes to prevent any non-compliant behavior and reinforce the importance of full disclosure. The goal is to foster a more transparent, accountable trading environment
