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The new trading guidelines introduced, last week, by the Nigerian Stock Exchange (NSE) may have pitched the Exchange against some of its dealing members who are claiming that the decision was another form of circuit breaker which is intended at keeping the market from falling.
The NSE had, last week, issued a new trading rule to the stockbrokers insisting that any sell order above one million units must be accompanied by a ‘contract mandate’ from the owner of the shares. On the other hand, the stockbrokers are alleging that what the NSE did, last week, was to reduce the maximum number of units that must be traded to 500 thousand units with a view to short circuiting the market’s downward movement.
An institutional investor, who sent in a text message to BusinessDay, last night said “it is absolutely ludicrous that there is a limit of 500,000 shares per order (previously 200,000) that can be input into NSE order system. They claimed initially it was a technical hitch but now it seems more a ploy to stop the market from going down. Someone offered us 20 million shares of a stock but they cannot execute unless we put in 40 separate orders”. 
In the heat of the market downturn, last year, the NSE set at a maximum of five percent upwards and a minimum of one percent maximum downward price movement to short circuit the free fall trend. 
However, the council of the Exchange listened to the stockbrokers’ voice, asking for a free price mechanism in order to mitigate the message being sent to foreign investors by the unequal price control. 
Indeed, the council responded by creating an equal price change allowance for both directions (upwards and downwards), by announcing a more flexible five percent daily price gain or loss limit as well as reducing the maximum number of units that must be traded to allow for a price change in any traded stock from previous 100 thousand units to 50 thousand units of shares. 
When contacted on the current development, officials of the NSE including the assistant director general, Musa Elakamah, and assistant general manager, research and information technology, Sola Oni, debunked the brokers’ claims. 
According to Elakamah, “When there is a large volume, what the ‘market control’ does is to ask the stockbrokers to give us a mandate from their clients before they can sell shares above one million units as a way of protecting investors and keeping fraudsters away from the market”.
He added that the measure was part of the NSE’s new strategy of protecting the market as well as checkmating activities of price manipulators in the market.
“Until you bring the mandate, you cannot trade on such big volumes. It is to protect the market especially now that it is picking up and we cannot afford to let it go down unnecessarily except by market forces”, he said. 
Sola Oni in his remarks said “it is all about investor protection. A bulletin has been passed to them on the requirements for trading including a mandate from their clients instructing them to sell the shares. It all borders on due diligence”, he said.
Another stockbroker, who would not want to be named, said “limiting an order to 500,000 shares per order knowing that the system has over 300 brokers and millions of retail investors as well as numerous institutional investors, shows that the order driven system of the NSE is flawed”. According to him, “large orders move the market either way but we believe that the limit placed is to stop the market falling further by people placing large sell orders. Also, a large number of deals going through give impression of buoyancy in the market which is not true.” 
Continuing, he queried, “Why is the limit in place? Why can’t brokers speak out? All orders are purged from the dealing system at the end of the day and those not filled get keyed in again showing inefficient use of manpower. If it was technical problem, how come NSE sent out a message last week, saying if a broker needs to enter a large order, they should speak to control office, which may facilitate putting the order through?”