The Nigerian Exchange Limited (NGX) has reaffirmed its dedication to rebranding the Nigerian capital market as a preferred location for international investments.
Jude Chiemeka, Divisional Head, Capital Markets, NGX, made this statement at the weekend’s NGX Index Circuit Breaker webinar, which had as its theme “Role and Impact of Index Circuit Breakers in the Capital Market.”
Chiemeka reaffirmed the exchange’s commitment to boosting the capital market’s competitiveness as a hub for international investments.
Additionally, he outlined the advantages of circuit breakers for daily trading activities, noting that they play a crucial role in capital markets operations by reducing panic selling on stock exchanges, stopping trading in the event of adverse volatility when the price of securities rapidly veers outside of pre-established bounds, and fostering investor confidence in the market.
On November 12, 2020, the NGX Index Circuit Breaker was activated for the first time since it was introduced in 2016, which was a historic occasion that he also brought up.
“Circuit breakers can accomplish an improvement in market quality, such as a reduction in volatility, an increase in liquidity, or a more effective price discovery process,” financial economist Kaitao Lin of the World Federation of Exchanges (WFE) stated in his presentation. Circuit breakers, he continued, frequently have no discernible effect on prices since they do not halt a decline in prices.
A theoretical market strategy and econometric event studies can be used to address issues with the circuit breaker and market quality, according to CPA, Office of International Affairs, Commodity Futures Trading Commission, United States, Kelvin Piccoli.
According to him, the econometric event studies examine the effects of circuit breakers on trading patterns and market variables while the theoretical market microstructure model investigates how information shocks affect liquidity, price formation, or agent behavior in the presence of circuit breakers.
The exchange recently declared its willingness to encourage corporate governance among listed companies and other market participants in Nigeria.
Temi Popoola, the chief executive officer of the NGX, said the launch demonstrates the exchange’s track record of leadership in promoting corporate governance among listed companies and other stakeholders within the capital market ecosystem. The launch of the Corporate Governance Charter was organized by the Nigerian Bar Association Section on Business Law.
“Sustainability is a fundamental part of our strategy as an exchange as we work to improve corporate governance in the Nigerian capital market,” the exchange said.
Accordingly, the exchange built a corporate governance rating system (CGRS) that offers a thorough analysis of the corporate governance and business integrity practices of Nigerian firms. It also included corporate governance principles into its listing and post-listing procedures.
