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Admission of NGX, 2 other securities grow NASD OTC market capitalisation by N120 billion in 3 months

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Investors at the National Association of Securities Dealers Over the Counter (NASD OTC) market have gained about N121.53 billion in value, between March and June this year, after the market capitalization of the Self-Regulatory Organization printed N652.51 billion in the second quarter of the year (Q2, 2021), thanks to the admission of the Nigerian Exchange Group Limited (NGX), 11 Plc and Capital Bancorp.

Sequel to the admission of the trio, the market capitalization of NASD OTC gained about 22.9% Quarter-on-Quarter, from N530.98 billion recorded in the first quarter of the year (Q1 2021) to N652.51 billion in the second quarter of the year (Q2 2021).

This was revealed by the Head of Operations & I.T, NASD OTC, Chinwendu Ekeh, during the recently concluded ‘’NASD H1 Review’’ held virtually. Key highlight of the half year review showed that;

  • The number of deals increased from 374 as of the end of Q1 2021 to 2,292 in the second quarter of the year (Q2 2021), indicating a surge of about 511.8% Q-o-Q.
  • The NSI return gained about 1.05% during the period under review, from 747.01 points in Q1 2021 to 754.88 points in Q2 2021.
  • Number of companies grew from 39 to 42 during the period.
  • Trade value also increased from N1.41 billion to N7.75 billion, indicating a surge of about 500% Q-o-Q.
  • Trade volume surged by about 937% Q-o-Q during the period under review, from 41.27 million to 425.34 million.

Commenting on the drivers of the recent gain in the NASD OTC, Ekeh said, ‘’We could see a considerable spike in our market capitalization at the end of Q2 2021 and our number of deals increased from 374 to 2,292 deals. These spikes or increase in transactions were driven primarily by the addition of three securities. During the quarter, we had the addition of NGX; we also had the addition of Capital Bancorp and 11 Plc as well. So these three securities in addition to the transactions on the existing forty securities we have trading in the market contributed to these increase in numbers.

‘’In Q2, we traded over N7 billion in value, while in Q1 we had about N1 billion, so the entrance of these three securities significantly raised the value of transactions that went through on the NASD. NGX added about N33.43 billion in terms of market capitalization to NASD Market Capitalization.”

She also stated that dematerialization on the shares of 11 Plc which is currently trading on the NASD OTC platform has now commenced.

On the recent developments going on in the market, the CEO of NASD Plc, Bola Ajomale, seized the occasion to announce that an Infrastructure Bank has opened and started trading on its platform. He also announced that a notable commercial bank has indicated interest to join the NASD platform as one of its Settlement Banks, thereby having the prospect to raise the total number of settlement banks to eight (8).

On its outlook in the second half of the year (H2 2021), the CEO announced that the Securities Exchange plans to;

  • Implement FIX protocol and tight-coupling to CSD.
  • Commence NASD Investors Protection Fund
  • Regulate crowd funded projects, opening NASD VentureRamp to Donor crowdfunding.
  • Introduce new market boards and products such as commercial papers, ETFs, among others.

What you should know

  • NASD Plc is a Securities Exchange registered by the Securities and Exchange Commission [“SEC”] to operate a formal Over-The-Counter [“OTC”] market in Nigeria. It provides trading platforms where all instruments not listed on a traditional exchange, registered by the Securities and Exchange Commission, can be traded through licensed stockbroking houses.
  • Recall that Nairametrics had reported the successful admission of the securities of the Nigerian Exchange Group Plc (NGX) on the platform of NASD OTC, in what appears to be the first cross-listing for securities exchange in Nigeria. The NGX security was registered on the platform with the ticker SDNGX and was opened for trading from the 13th of April, 2021.
  • In terms of impact, the Nigerian Exchange Group (NGX) added about N33.43 billion to NASD Market capitalization, while 11 Plc and Capital Bancorp added about N82.94 billion and N2.94 billion respectively.
  • Due to its conversion to a private company, ARM Plc exited the NASD OTC market during the period under review, thus bringing down the number of securities trading on the platform to 42.

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