Something interesting is happening in global capital markets, and Nigeria is firmly in the middle of it. From London to Hong Kong to Athens, major exchanges are rethinking decades-old assumptions about how much of a company needs to be publicly traded. That conversation has now reached Lagos and, unsurprisingly, it has drawn passionate views from all sides.
At the heart of the debate is a recurring question: do billionaires control markets? The answer is nuanced. Billionaires rarely control markets outright. They may influence major individual equities, sectors, and investor sentiment, but not entire exchanges. Most stock markets are structured with institutional investors, pension funds, mutual funds, sovereign wealth funds, and retail investors collectively owning the majority of listed equities.
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This is healthy. Markets thrive on debate. But lost in the heat of recent discussions is a fundamental question: what does a mature, world-class capital market actually look like?
Like many modern exchanges, Nigeria’s market framework recognises that liquidity can be achieved through a combination of ownership spread and absolute market value, rather than rigid reliance on percentage thresholds alone. This is not a loophole; it is a deliberate and sophisticated design choice.
What Free Float Really Means
Free float refers to the number of shares an issuer has outstanding and available for public trading on an exchange. It includes shares held by the investing public but excludes shares held directly or indirectly by promoters, directors, and their immediate family members. It also excludes shares held within employee share schemes, shares held by strategic investors, shares held by significant shareholders holding five percent or more of the issued share capital, and shares owned by government entities at the federal, state, or local level.
Free float is a key determinant of stock market liquidity, and listed companies are required to maintain a minimum free float to remain listed.
Consider what this means in practice: a company with 5 percent free float but N500 billion in publicly traded shares provides more liquidity than a company with 40 percent free float but only N10 billion in market value. For smaller companies, the percentage matters. But as companies grow to multi-trillion-naira valuations, the absolute value becomes the more meaningful liquidity measure.
If you look closely, you will observe that several of Nigeria’s largest companies operate with relatively low free float percentages while still providing substantial liquidity, as their free float values run into hundreds of billions of naira.
Is this optimal? It is encouraging that regulatory frameworks are reviewed periodically to ensure continued competitiveness and alignment with global best practices. But the current approach is neither an accident nor evidence of dysfunction. It’s a deliberate design choice that mirrors international practice.
The Global Shift Few Are Talking About
In recent years, several major exchanges have adjusted their free float requirements to reflect market realities, reduce regulatory friction, and widen eligibility for listings.
The London Stock Exchange reduced its minimum free float requirement from twenty-five percent to ten percent in 2021 following the recommendations of the Lord Hill Review aimed at improving London’s competitiveness. The Hong Kong Stock Exchange has introduced an alternative pathway effective January 1, 2026, allowing a ten percent free float for companies with a market value of at least HK$1 billion. The Athens Stock Exchange lowered its requirement from twenty-five percent to fifteen percent for companies with a market capitalisation of at least €200 million.
These changes reflected a growing recognition that rigid percentage rules can deter listings or force ownership structures that do not align with business realities. The common thread is clear: liquidity can be achieved through a balance of free float percentages and absolute market value.
In practice, Nigeria’s structure embodies this dual philosophy through distinct listing tiers. Note that in Nigeria, companies can comply by meeting either a volume requirement, which is a percentage of the total listed shares, or a monetary value requirement, based on the market capitalisation of the free float shares. The Premium Board, designed for the nation’s corporate titans, demands either a 20 percent free float or a float value reaching N40 billion. The Main Board maintains the 20 percent free float requirement but sets its value threshold at N20 billion. For emerging and innovative firms, the Growth & Technology Boards adopt a more flexible stance, with free float requirements scaling from 5 percent to 15 percent, each tier paired with a corresponding market value threshold.
The Diversity Question
A look at Nigeria’s top-tier listings reveals significant diversity. Some companies have free floats above eighty percent, while others are below ten percent. Some rely on strategic anchor investors, while others have widely dispersed ownership among retail and institutional holders.
This diversity reflects differences in business models, growth stages, and investor bases. A widely held commercial bank serves different market needs than a family-controlled industrial conglomerate, even when both are legitimate investment opportunities. Mature markets accommodate this diversity rather than forcing every company into a single ownership template.
The real issue is not whether concentrated ownership exists, but whether markets have sufficient depth and liquidity to meet investor needs.
An Uncomfortable Truth
Nigeria’s liquidity challenges are not primarily driven by free float levels. They are shaped by deeper structural factors, including market depth, institutional participation, pension fund investment restrictions, foreign exchange policies, and market infrastructure.
Mandating a forty percent free float across all companies would not eliminate these challenges. Conversely, addressing pension fund restrictions, improving infrastructure, and expanding institutional access could significantly boost liquidity even under current free float structures.
This is not to dismiss free float concerns, but to acknowledge that sustainable market development requires comprehensive, multi-factor thinking rather than single-variable solutions.
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Regulatory Evolution and Market Maturity
Market frameworks evolve continuously to balance multiple objectives: maintaining listing attractiveness, ensuring adequate liquidity, accommodating different business models, and protecting investor interests. This evolution requires institutional processes, evidence-based analysis, and time, because getting it wrong could set markets back years. The global trend showcased above toward flexibility in free float requirements suggests many jurisdictions are finding that balance point. Nigeria’s ongoing examination of these issues reflects similar considerations within local context.
Moving beyond binary thinking
The debate over Nigeria’s capital market structure often devolves into false choices: either you support current structures or you’re demanding radical transformation. Either you see oligarchic capture or you’re naive about market concentration. Reality is messier! Nigeria’s market has achieved remarkable returns while operating under current rules. That’s evidence of something working. But there’s clearly room for evolution in making the market more accessible to large institutional investors. Both things can be true simultaneously. The question isn’t whether to change, as change is inevitable and already underway globally. The question is how to evolve in ways that strengthen rather than destabilise the market.
What Real Maturity Looks Like
A mature market is not one without disagreement. It is one where disagreement drives constructive evolution through credible institutions. It balances competing interests to achieve workable outcomes while allowing room for diverse ownership models. By these measures, Nigeria’s capital market shows clear signs of maturity, including ongoing regulatory review, robust public debate, and openness to international best practices alongside local context.
The Path Forward
Nigeria’s capital market will continue to evolve. Free float requirements may be refined, new mechanisms for institutional participation may emerge, and market infrastructure will improve. This evolution does not require assuming bad faith by market participants or weakness on the part of regulators. It requires recognising that markets are living systems, and that adaptation, rather than rigidity, sustains long-term growth.
