Financial experts have urged the Nigerian Exchange Limited (NGX) and market regulators to raise the minimum free float requirement for listed companies to 50% to deepen liquidity and improve market efficiency.

This recommendation was a central theme on the Market Watch podcast, where analysts discussed current trends in the Nigerian equities market.

Currently, the Nigerian Exchange Limited (NGX) generally requires listed companies to maintain a minimum free float of 20% of their issued share capital held by the public. Alternatively, this can be a free float market value of N20 billion for the Main Board or N40 billion for the Premium Board. The Growth Board has lower requirements, typically between 10% and 15%.

Market analysts Idika Aja and Muktar Mohammed stated that while increasing trading hours is beneficial, raising the volume of shares available for trading would significantly enhance market depth and boost investor participation.

Idika Aja noted that the NGX’s plan to extend trading hours from 9:30 a.m. to 2:30 p.m. to 9:00 a.m. to 4:00 p.m. aligns with global standards but may not substantially improve liquidity on its own.

Aja emphasized, “If NGX can increase that free float to say 50%, that will make stocks available for people to trade.”

Muktar Mohammed dismissed concerns that the market is in bubble territory, asserting that the current rally is driven by improved fundamentals rather than speculative excesses. He added that recent price increases reflect a correction from years of undervaluation, not unsustainable growth.

The discussion occurs as the NGX prepares to implement extended trading hours aimed at improving market participation.