NGX deepens liquidity with relaunch of market making programme

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Uba Group

BY KENNETH EZE

The Nigerian Exchange Limited has relaunched its market-making programme, effective October 4, 2021.

This was contained in a statement electronically transmitted to The Point from the Exchange, Thursday.

The statement read, “This comes on the back of the review of its rules to provide the flexibility to implement diverse Market Making programmes across all asset classes listed on The Exchange, as approved by the Securities and Exchange Commission.”

The Point reports that market making occurs when a Trading License Holder provides continuous two-way quotes – both buy or sell prices – to the market on selected securities during the trading day.

This initiative would allow market makers to display the amount they are willing to buy or sell a security and the guaranteed number of units.

“Once they receive an order from a buyer, they sell off from their own inventory, ensuring that the order is completed,” the statement added.

It revealed that NGX Market Makers across its product classes comprised ABSA Securities Nigeria, CSL Stockbrokers, Vetiva Securities, Stanbic IBTC Securities, Chapel Hill Denham Securities, FBN Quest Securities, and United Capital Securities.

It added that the list of Market Makers and their selected securities could be found on the Exchange’s website.

Chief Executive Officer, NGX, Temi Popoola, said, “At NGX, we are committed to tackling liquidity constraints and ensuring sustained flow of funds in the capital market.

“We recognise the importance of liquidity as a driver of participation in our market and are confident that Market Making will ease the barrier of entry and exit, whilst providing a measure of control over volatile price fluctuations.

“As we continue to consider ways to maximise opportunities across our value chain, our goal is to evolve with the increasingly sophisticated needs of our stakeholders and Market Making is just one of the strategies we will deploy in this regard. We also wish to thank the SEC and CSCS for their contribution towards the relaunch of the programme.”

Similarly, the Divisional Head, Trading Business, NGX, Jude Chiemeka, stated, “The benefits to be reaped from Market Making cut across the spectrum of our market.

“For the Market Makers, they can expect enhanced revenue opportunities as well as reduced transaction and regulatory fees in recognition of the responsibility and risks they have taken on.”

He listed other benefits as increased liquidity, greater market depth, enhanced portfolio diversification, and more.

“To ensure that the market indeed reaps the benefits, we have been painstaking in our selection of Market Makers and we encourage investors to leverage the opportunities they bring to the table,” Chiemeka added.

Recall that NGX first launched the market making programme in 2012 in an effort to improve liquidity and increase efficiency across asset classes.

“This relaunch takes into consideration the evolving needs of stakeholders and will allow for periodic adjustments to meet the objectives of the programme,” the statement concluded.