Introduction
The Exchange is proposing to add the Rules for Price Stabilization of Securities to the Rulebook of The Exchange (”Rulebook”) (Issuers’ Rules).
Summary of the Proposed Rules
The stabilization of securities creates a regulatory framework for ’the buying of security for the limited purpose of [preventing or] or retarding a decline in its open market price in order to facilitate its distribution to the public. Price stabilization is aimed at supporting and maintaining the price of listed securities for a limited period after the listing or offer, thus establishing an orderly market for securities in the immediate secondary market after an offer.
The purpose of the proposed Rules for Price Stabilization of Securities (”proposed Rules”), is to define the circumstances and manner in which price stabilization will be permitted by The Exchange, in accordance with the provisions of the Investments and Securities Act (ISA), Consolidated Rules and Regulations of the Securities and Exchange Commission, 2013 (SEC Rules), and the Rulebook of The Exchange.
The proposed Rules address the parameters of substantive price support in securities offerings. In addition, they serve as a defence to the necessary extent against prohibited trading practices, such as market manipulation, and breach of market abuse rules.
Given that transparency is a prerequisite for the prevention of market abuse, it is important to ensure that adequate information is disclosed or reported prior to, during, and after any trading effected for the stabilization of securities, in order to avoid market abuse and illegal market practices. In addition, market integrity requires adequate public disclosure of stabilization measures. Reporting of the stabilization transactions is also necessary to allow competent authorities to supervise stabilization measures.
The proposed Rules include definition of key terms, permitted price stabilization and permitted stabilizing activities, over-allotment, requirements for price stabilization, stabilization period, price conditions, eligibility criteria for Stabilization Managers, responsibilities of the Stabilization Manager, disclosure and reporting obligations of the Stabilization Manager, amongst others.
Invitation for Comments
The Exchange is pleased to invite you to participate in its rule making process. Your participation is required by way of reviewing the proposed Rules and providing your comments thereon.
The Exchange views your participation as important for the following reasons:
1. To create public awareness and solicit the public’s feedback on the proposed Rules; and
2. To improve the quality of the draft Rules and thereby have a robust, well written set of Rules.
We are involving as many stakeholders as possible in this rule making process in order to achieve the aforementioned goals. Please be assured that your comments will be considered in arriving at the final text of the Rules.
Response and Timeline
We will be grateful to receive your comments not later than the close of business on Friday, 20 April 2018. Your comments should be set forth in a WORD document attached to an electronic mail to Mr. Oluwatoyin Adenugba, Head, Rules and Interpretation at The Exchange at oadenugba@_nse.com.ng.
Approvals
Please note that the draft Rules are subject to the approval of the National Council of The Exchange, and the Securities and Exchange Commission.
