NGX, SEC begin review of free-float requirements to unlock liquidity

Nigeria’s capital market regulators have begun reviewing free-float requirements for listed companies in a move aimed at boosting liquidity, deepening the equity market, and attracting more investors.

The Nigerian Exchange (NGX) Group confirmed the development on Monday, March 16, 2026, noting that discussions are ongoing with the Securities and Exchange Commission (SEC) to reassess existing rules.

The review comes amid concerns that low levels of publicly tradable shares in some listed firms are limiting market liquidity and increasing the risk of price volatility.

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Under the current framework, large companies listed on the NGX are required to make available for public trading a minimum of 20% of their shareholding or at least N40 billion worth of shares. Companies listed on the Growth Board, typically small and medium-sized enterprises (SMEs), are required to float at least 15% of their share capital.

What regulators are saying

The Exchange said it is working with SEC to review the free-float framework and introduce measures that will ensure more companies comply with the requirement.

The move is also expected to address concerns around liquidity and the accuracy of free-float data captured by the exchange.

• “This includes assessing how we optimize existing free-float levels, ensuring the accuracy of free-float data captured by the exchange and evaluating whether current free-float requirements remain appropriate as the market evolves,” said Temi Popoola, Chief Executive Officer of NGX Group.
• “We are considering whether elements of free float should play a greater role in how some of our indexes are structured, given that many indexes are currently based primarily on market capitalization,” he added.
• _“All of these efforts form part of our broader objective of deepening the market and ensuring that its structure continues to support growing investor participation.” _

The NGX boss also hinted that regulators may revise public shareholding rules and consider basing equity and index weightings on shares outstanding rather than purely on market capitalization.

**More insights **

Free float has drawn increasing attention globally after index provider MSCI tightened its definition of the measure earlier this year, triggering portfolio adjustments by passive investors in several emerging markets.

According to regulators, tightly held controlling shares often restrict liquidity and increase the risk of sharp price swings.

• Dangote Cement Plc, for example, has a free float of about 11%, while BUA Cement Plc has less than 3% of its shares available for trading.
• Despite these low percentages, both companies still meet the existing requirement of having at least N40 billion worth of shares available to the public.

Market operators believe that increasing free-float levels could improve price discovery, attract institutional investors, and make the market more resilient to volatility.

What you should know

The review of free-float rules follows recent regulatory scrutiny in the market, including the suspension of a newly listed company on the NGX Growth Board over concerns about limited stock availability and an unusual surge in its share price.

• Nigeria may also draw lessons from India, which introduced reforms in 2010 to address similar concerns over dominant controlling shareholders and limited public shareholding.
• The South Asian country mandated listed firms to maintain a minimum public shareholding of 25%, while companies below the threshold were required to increase their free float by at least five percentage points annually.
• Newly listed firms were given three years to meet the requirement, helping the country attract about $1.25 trillion in foreign inflows and expand its retail investor base.

Analysts say that increase in free-float requirements could improve liquidity in Nigeria’s market and encourage greater foreign participation, stressing that if Nigeria adopts stricter free-float rules, it could significantly deepen the local equity market while improving investor confidence.

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