Nigeria stock exchange says automates rights issues trading

The Nigerian Stock Exchange (NSE) said it has automated trading in Rights issues and settlement with effect from May 5, 2017, the exchange said in a statement on Monday.
In a statement, the exchange said with this development, shareholders of companies planning rights issue can now sell subscription rights both efficiently and at fair prices.
The exchange executive director, market operations and technology, Ade Bajomo who said this noted that the automation of Rights trading and settlement will enhance price discovery as rights can now be traded and re-traded without settlement complexities.
“It will help eliminate operational challenges resulting from manual trading and cash settlement between counterparties, whilst simplifying counterparty trade reconciliation between the brokers, registrars and the NSE,” Bajomo was quoted as saying.
Bajomo said for an investor to be eligible to participate in rights trading, he/she must have a CSCS account set up through a stock broking firm while the investor must fund his/her broker with the consideration value, premium and transaction fees, prior to execution of his/her mandate.
Prior to this automation, trading, and settlement of rights, where an investor decides to sell on the floor of the Exchange, was done manually.
A rights issue is an offer to existing shareholders to purchase additional shares in a company during the company’s issue of new shares.
The invitation to existing shareholders is usually made in proportion to their existing holdings, allowing them to buy the newly issued shares at a fixed price, usually at a discount to the market value of the shares, within a specific subscription period.
A rights issue is, therefore, one of the ways by which a listed company can raise funds from its existing shareholders.
Bajomo said a unique security code, different from that of the underlying security will be assigned to the right on the stock exchange trading platform.