The Nigerian Exchange Limited (NGX) has restated its commitment to reposition the Nigerian capital market as a global investment destination.
Divisional Head, Capital Markets, NGX, Jude Chiemeka, stated this at the NGX Index Circuit Breaker webinar, themed, ‘Role and Impact of Index Circuit Breakers in the Capital Market,’ at the weekend.
Chiemeka reiterated the exchange’s commitment to enhancing the competitiveness of the capital market as a global investment hub.
He also listed the benefits of circuit breakers to daily trading operations, adding that it plays a significant role in capital markets operations by helping to curb panic-selling on stock exchanges, halt trading in event of adverse volatility when prices of securities rapidly move outside of pre-determined bounds and instill investor confidence in the market.
He also cited the unprecedented event of November 12, 2020 when the NGX Index Circuit Breaker was triggered for the first time since its introduction in 2016.
Financial Economists World Federation of Exchanges (WFE), Kaitao Lin, in his presentation, said: “Circuit breakers can achieve an improvement in market quality, such as a reduction in volatility, an increase in liquidity, or a more efficient price discovery process. However, he added that circuit breakers often do not have any significant impact on prices as they do not stop a fall in prices.
Also speaking, CPA, Office of International Affairs, Commodity Futures Trading Commission, the United States, Kelvin Piccoli said questions about the circuit breaker and market quality can be tackled using a theoretical market approach and econometrics event studies.
According to him, the theoretical market microstructure model examines how information shocks affect liquidity, price formation or agent behaviour in the presence of circuit breakers while the econometric event studies test the impact of circuit breakers on trading patterns and market variables.
The exchange had in a recent forum expressed readiness to promote corporate governance among listed firms and other stakeholders in the Nigerian capital market.
At the launch of the Corporate Governance Charter organised by the Nigerian Bar Association Section on Business Law, the Chief Executive Officer of the NGX, Temi Popoola said the launch demonstrates the exchange’s track record of leadership in promoting corporate governance amongst listed companies and other stakeholders within the capital market ecosystem.
“For us as an exchange, sustainability is a key component of our strategy as we aim to enhance corporate governance in the Nigerian capital market.
In line with this, the exchange incorporated corporate governance principles in its listing and post-listing requirements and established a corporate governance rating system (CGRS) that provides a comprehensive diagnosis of Nigerian companies’ corporate governance and business integrity practices.