NASD OTC reduces price band to ±10%

In January 2015, NASD OTC plc introduced a price band of ±15% on all trading securities. Currently, the Over-The-Counter (OTC) market for trading of unlisted securities has now further reduced the price band to ±10%.

It has also introduced a 50,000-unit minimum volume requirement for a price change to occur during a trading day.

As shares are being traded, prices of shares also change to reflect the new prices. This change in share prices, especially in the short-term, is called ‘Price Movement’.

The price of a share at the end of a trading day will be the closing price of that security which would have undergone various movements in price during the day.

Hitherto there was no minimum volume requirement for price movements on securities trading on the NASD OTC Market.

“These initiatives are necessary to ensure smoother price movements and provide better stability to share values”, according to the NASD plc.

“In line with our goal of creating liquidity transparently, we will continue to monitor the performance and value-add of the NASD OTC Market to investors and constantly introduce measures that will enhance the credibility and efficiency of the market”, NASD plc further told stakeholders in the market.

“As the market matures, it has become pertinent to introduce initiatives that can help stabilise the market and create a better price discovery mechanism for investors”, it further stated.