The Nigerian Stock Exchange ( NSE ) has launched the auto-flow mechanism in its trading engine. This allows companies to send their corporate earnings’ reports and other information directly to the trading engine on a real time basis.
The auto-flow function, an existing function of the issuers’ portal had been partially disabled in order to allow a first level, non-substantive review of filings by the NSE before they are circulated to the market and the general public. Since inception in 2013, the Exchange has seldom permitted information to auto-flow to the market.
With the launch of the full auto-flow mechanism, all corporate information shall flow from the companies to the stock market, a move that will reduce possibility of interference and distortion of the price discovery mechanism. A circular obtained by The Nation at the weekend indicated that the full auto-flow mechanism began on the first trading session in 2018.
The auto-flow mechanism is one of the functionalities of the X-Issuer platform of the Exchange. It allows information filed by companies and other issuers through the issuers’ portal to flow directly to the market on a real time basis without any human intervention.
According to the Exchange, the time is ripe for all information submitted via the issuers’ portal to auto-flow directly to the market without any intervention of the Exchange.
The NSE had noted that operationalizing the complete auto-flow function on the issuers’ portal will eliminate the current practice of reviewing financials before the financials flow to the market and the Exchange’s website, thus ensuring a real time flow of information directly from the issuer to the market.
In order to ensure a seamless transition from previous system to a complete auto-flow system, the Exchange had adopted a four-phase approach that included regulatory and statutory disclosures training, assessment of issuers’ compliance with disclosure requirements, pilot test of auto flow and full launch of complete auto flow.
Under the phase one, which was held between November and December 2016, the Exchange had organized trainings for company secretaries, compliance officers, chief finance officers and other issuers’ representatives charged with the responsibility of making disclosures to the Exchange.
In the second phase, the Exchange conducted a comprehensive review of issuers’ filings using interim returns for the last quarter of 2016 and the December 2016 audited accounts of listed companies with December year ends. Deficiencies identified at this phase were highlighted and communicated to companies for correction in subsequent filings.
Under the third phase, the Exchange conducted a pilot test of the auto-flow mechanism using September 2017 interim returns and September audited accounts of companies with September year ends. Any report with regulatory and statutory deficiencies was withdrawn and corrected immediately. There was no sanction imposed for any report with deficiencies at this stage.
Under the current final phase, the Exchange has commenced full operationalization of the auto-flow mechanism in X-Issuer using December 2017 audited accounts. The circular indicated that with the full launch of auto-flow, the Exchange will apply regulatory sanctions on companies whose filings flow to the market with any form of deficiency.