Muktar Mohammed: NGX Share Price Threshold Review Targets Liquidity, Not Manipulation Concerns
Muktar Mohammed says NGX share price threshold review enhances liquidity and trading efficiency, not manipulation concerns, in Nigerian equities market.
Muktar Mohammed says NGX share price threshold review enhances liquidity and trading efficiency, not manipulation concerns, in Nigerian equities market.
The CEO of Finance with Muktar, Muktar Mohammed, said the Nigerian Exchange’s (NGX) review of share price movement thresholds reflects a broader effort to improve market liquidity and trading efficiency rather than address concerns around manipulation in the equities market.
Speaking in an interview with ARISE NEWS on Friday, Mohammed explained that the introduction of price group classifications by the Nigerian Exchange would help better align trading activity across different stock categories and improve overall market efficiency.
Explaining the changes to trading rules in the Nigerian equities market, the official said the adjustment alters the volume required to trigger price movement, especially for high-cap stocks.
“When you look at a stock such as Seplat Energy Plc trading at 11,000 naira, previously the share price movement required 100,000 units. But now, 10,000 units could move the price either up or down,” he explained.
He added that the reforms were expected to deepen liquidity in higher-priced stocks while making prices more responsive to market activity.
“That means you will be able to buy 10,000 units, and it could move the price for those looking to buy or sell. It will improve liquidity in the market,” he said.
Speaking on the Nigerian equities market, he stated:
“I don’t think there’s any concern about manipulation. But when you look at it again, it will benefit these high-cap stocks,” he noted, stressing that the real challenge in the Nigerian market remains liquidity concentration rather than manipulation.
Addressing concerns over price distortions in the equities market, he explained that the issue is largely driven by low liquidity in certain stocks dominated by major shareholders, rather than broader market inefficiencies.
“The main challenge they need to address is liquidity. Some stocks are not liquid, mostly those held by one individual. Some individuals hold up to 70%, 80%, 90%. They determine the price of those stocks,” he said.
He noted that lthough market manipulation can occur in low-cap stocks, the more pressing concern is structural liquidity challenges.
“For instance, if you look at what happens in certain low-cap stocks, that is where issues of manipulation tend to be more evident. But in reality, the bigger problem is liquidity. That is what really needs attention,” he added.
He explained that the Nigerian Exchange Limited (NGX) already operates circuit breakers and daily price limits to maintain stability in trading.
“In the Nigerian market, maximum price movement in a day is 10%. There are circuit breakers to control that,” he stated.
On broader market dynamics, he said:
“Half-year earnings would do a lot of good, but don’t forget we are in a pre-election year. The economy takes a back seat, and the market is always a bit dull,” he said.
He concluded that pension fund activity and dividend expectations could also shape market recovery later in the year, depending on entry opportunities and policy direction, adding that sustained institutional positioning could support overall market stability if macroeconomic conditions improve.
