* Trading day may be lengthened by 2-3 hours
* Daily share price movement limit may rise to 10 percent
* Closer integration with African exchanges eyed
* In talks with Absa over exchange-traded fund
(Adds comments on demutualisation, reforms, background)
By Chijioke Ohuocha
LAGOS, Oct 27 (Reuters) - Nigeria's stock exchange, the third-largest in Africa, may lengthen its trading hours and loosen restrictions on share price movements in a bid to boost liquidity and attract more foreign investors.
Interim Director General Emmanuel Ikazoboh told Reuters the exchange was considering lengthening its trading day by two to three hours and doubling the limit on daily share price movements to 10 percent to try to boost volumes.
Ikazoboh said in an interview late on Tuesday the 5 percent cap on individual stock movements had "drastically" reduced liquidity, while a trading day which ends at around 12:30 local time (1130 GMT) shut out U.S. and other foreign investors.
"Within the next three weeks, I believe the case of the price cap and the number of hours trading will be determined ... Papers have been prepared, we just need the (stock exchange) council and SEC's approval," he said.
Nigeria's equities market, which trails only South Africa and Egypt on the continent, has at times been one of the world's best performing frontier markets, but weak regulation and low liquidity levels have hindered its development.
Ikazoboh, former head of Deloitte in West and Central Africa, was named interim manager of the bourse in August. The Securities and Exchange Commission (SEC) removed his predecessor amid worries about inadequate stock market supervision and financial mismanagement.
Although his tenure is limited -- he expects a new permanent director general to be in place by the end of the year -- he is working with the SEC to lay the foundation for reforms which fit into a wider overhaul of the capital markets and banking sector.
WIDER REFORM PROGRAMME
The SEC has said the reforms will lead to demutualisation, turning the exchange into a listed company, making it more competitive and giving it a larger incentive to bring in profitable new products.
"We are working towards having the African stock exchanges integrate to create economies of scale," Ikazoboh said, adding demutualisation would be "on the front burner" from next year.
"Since most of the other players like the South African stock exchange, the Egyptian stock exchange, are all demutualised, it's natural that for us to go into that integration process...," he said.
Diversifying an equities market dominated by banking is also key to attracting new investment. Ikazoboh said more than 250 companies were seeking to list, including ones from the telecoms, energy, and manufacturing sectors.
The market's capitalisation rose by a third on Tuesday to just over 8 trillion naira ($53 billion) after billionaire industrialist Aliko Dangote listed his Dangote Cement business.
But it is still off peaks of around 13 trillion naira in early 2008 before the global financial crisis, a level to which Ikazoboh forecast it could take another 18 months to return.
He said the bourse was in talks with South Africa's Absa Capital about listing an exchange-traded fund (ETF).
"We are in discussion with Absa Capital who are thinking of coming to list an ETF which will be securitised by gold in southern Africa. As soon as the SEC gives approval, before the end of the year, we would list the ETF," he said. (For more Reuters Africa coverage and to have your say on the top issues, visit: http://af.reuters.com/ ) (Writing by Nick Tattersall; Editing by Michael Shields)