By Aduragbemi Omiyale
After receiving approval from the Securities and Exchange Commission (SEC), the Nigerian Exchange (NGX) Limited has relaunched its market making program.
The program, which is part of the exchange’s efforts to deepen liquidity in the country’s capital market, went into effect on Monday, October 4, 2021.
The market making initiative was initially halted to allow for a review of the rules to provide the flexibility to implement various market making programs across all listed asset classes.
Market making occurs when a licensed trading holder (stockbroker) provides continuous two-way quotes; both buy or sell prices, at the market on selected securities during the trading day.
Essentially, market makers 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 from their own inventory, making sure the order is complete.
Speaking on the benefits of the program, NGX Business Division Manager Mr. Jude Chiemeka said, “The benefits to be gained from market making span the spectrum of our market.
“For market makers, they can expect better income opportunities as well as lower transaction and regulatory costs in recognition of the responsibility and risks they have taken on.
“There are also the benefits of increased liquidity, greater market depth, increased portfolio diversification, and more that other players in the capital market will reap.
“To make sure that the market is actually reaping the rewards, we have carefully selected our market makers and we encourage investors to take advantage of the opportunities they bring. “
In his remarks, NGX CEO Mr. Temi Popoola said, “At NGX, we are committed to tackling liquidity constraints and ensuring a sustained flow of funds in the capital market.
“We recognize the importance of liquidity as a driver of participation in our market and believe that market making loosens the barrier to entry and exit, while providing a measure of control over volatile price movements. “
“As we continue to consider ways to maximize opportunities along our value chain, our goal is to evolve with the increasingly sophisticated needs of our stakeholders and market making is only a matter of course. ‘one of the strategies we will deploy in this regard. We would also like to thank the SEC and the CSCS for their contribution to the revival of the program, ”he added.
It should be remembered that NGX first launched the Market Making Program in 2012 with the aim of improving liquidity and increasing efficiency across all asset classes.
This relaunch takes into account the changing needs of stakeholders and will allow periodic adjustments to meet the objectives of the program.
NGX’s market makers in its product categories include ABSA Securities Nigeria, CSL Stockbrokers, Vetiva Securities, Stanbic IBTC Securities, Chapel Hill Denham Securities, FBN Quest Securities and United Capital Securities. The list of Market Makers and their selected securities is available on www.ngxgroup.com.