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2017/2018 NSE FACT BOOK 2017/2018 NSE FACT BOOK
The Performance Documentary of Listed Nigerian Companies The Performance Documentary of Listed Nigerian Companies

Governance Ra ng System (CGRS) with score of Index Governance Commi ee: specialized index can also be constructed to track 3. Leading indicator: Prices of companies, represented in
minimum ra ng @ 70% The NSE cons tuted an Index Governance Commi ee to performance of a specific sector (e.g. NSE Insurance-10 the index, are equivalent to the present value of future
· Achieve a market capitalisa on that is equal to or in oversee index methodology, calcula on algorithms, and Index), or the performance of all publicly traded cash flows; if future cash flows are expected to change
excess of US$1billion or N200billion prior to admission index administra on; companies in a country (e.g. DJ Wilshire 5000 Total (increase or decrease), the index will reflect these
into the premium board Stock Market Index), or all publicly traded companies expecta ons.
· Have a minimum float rate of 20% of its issued share The index Governance Commi ee is responsible for the globally (e.g., Russell Global Index), and so on.
capital or the value of shares floated is equal or above maintenance and governance of the methodology (ies) for 4. Marke ng instrument: Interna onal investors can
US$1billion or N200billion the Indices. The Index Commi ee shall be responsible for 2. Allows for a self-regula ng market: Arbitrageurs can compare the performance of an index to other indices
the oversight and decision-making regarding the analy cal easily iden fy discrepancies in the market and correct around the world. A strong return is likely to increase
Calcula on and Methodology aspects of the Indices, including the formula, the market to ensure that prices are accurate. public awareness and foreign investment in that
Premium Index is a Total Return Index and is weighted by methodologies, weigh ngs, and rebalancing. The Index market.
adjusted market capitalisa on. Normal dividend payments Commi ee shall also be responsible for ensuring
are assumed to be reinvested and accounted for by a compliance with applicable regulatory standards. The IGC
computa on of a new base value or divisor adjustment on meets on quarterly basis, unless otherwise agreed by
the closure dates. Also, special dividends from non- members.
opera ng income require index divisor adjustments to
prevent the distribu ons from distor ng the index value. Index Business Commi ee:
The NSE created and operates an index business
Index Formulae commi ee rela ng to the commercializa on of the Indices
(“Business Commi ee”).
The NSE premium index is calculated using the formulae
below same as the Pension index formulae above. The Business Commi ee will be responsible for:

i. Overseeing NSE's product management team on
Current Market Value X 1000 commercial ma ers, such as licensing prac ces,
Base Market Value marke ng and promo on the Indices, overall business
strategy, and new Indices.
ii. Agreeing on a yearly basis, on all commercial efforts,
Or CMV known as the business cycle. This business cycle shall
---------- X 1000 include, but not be limited to, an exploratory period to
BMV determine the launch of new indices, index
development and launch process, and ongoing support
For addi onal informa on on all the NSE Indices, please log of the Indices. For the avoidance of doubt, any new
into h p://www.nse.com.ng/Market Data/Indices Products shall be subject to a decision of the Business
Commi ee, save for equi es and fixed income.
(C) THE NSE INDEX COMMITTEE iii. Pu ng in place appropriate control measures to
As with most exchanges, The Nigerian Stock Exchange has govern each Party's right of first refusal with respect to
in place an Index Commi ee that monitors all index the establishment of New Indices.
adjustments, re-balancing and re-weigh ng when
required. This commi ee is composed of staff of relevant For the avoidance of doubt, the Business Commi ee shall
Departments - Market Opera ons and Informa on not be involved in any Index Commi ee or Indices
Technology, Quota ons and Lis ngs, and Strategy and New governance ma ers. The Business Commi ee shall meet
Products departments. The commi ee is responsible for from me to me but at least twice per year.
monitoring the re-balancing ac vi es, as well as the re-
weigh ng of the all NSE indices at the end of each period as (D) Benefits of Crea ng an Index
may be specified. The NSE Index Commi ee is divided into 1. Summarizes the market: A broad-based index is
two sub-commi ees i.e. composed of companies from all sectors of the
economy, so it provides an easy way to gauge the
1. Index Governance Commi ee: performance of the en re market, as well as, by proxy,
2. Index Business commi ee: the economy as a whole. Therefore, indices act as
indicators of business condi ons since stock markets
2017/2018 NSE FACTBOOK

are believed to be sensi ve to business condi ons. A

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