Making the announcement while reviewing the performance of the stock market and making prognosis into the New Year, Onyema dismissed the claims that the cost of transaction in the primary segment of the market was costly and needed to be reviewed to allow more companies to access the market using the instrument of initial public offers.
His announcement followed repeated calls by stakeholders that the ceiling should be removed so that companies that do not have the fundamental to remain at that state could be priced down accordingly. In view of this, he said that the NSE has concluded plans to inaugurate a working committee with a view to determining what is obtainable in other climes and align the market to it.
“We are going to set up a working committee to work with the industries, the companies and everybody else to see if the market structure today where you have the par value as the lowest it can go is the right market structure, and we will see what other markets are doing and actually come up with something,” he assured.
On the issue of cost of transactions in the primary market, he noted that though a lot still need to be done to increase the vibrancy of that segment of the market, however, compared with other markets, NSE ranked among the cheapest in terms of cost.
His words: “Even though you may think that the cost of activities in the primary market is high, if you juxtapose it against other markets I have worked in, you will find out that it is really low actually. The totally amount I think by law is 4.35 percent.
In America, your investment banker alone will charge you five to six percent on the value of the transaction; forget about other parties to the transaction. I think a lot of work needs to be done in the primary market to make listing of companies and other products more efficient, but in terms of costing, we are very competitive actually.”
The nominal value of any particular is the face value of the stock and the shares are not permitted to fall below the par value. It is the value stated in the corporate charter below which shares of that class cannot be sold upon initial offering. In the Nigerian Stock Exchange, the par value of quoted companies is 50kobo.