By Kayode Tokede
The Nigerian Exchange Limited (NGX) has announced the relaunch of its Market Making program effective 4 October 2021. 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 (SEC).
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. 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 off from their own inventory, ensuring that the order is completed.
NGX Market Makers across its product classes 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 can be found on www.ngxgroup.com.
Speaking about the program, the Chief Executive Officer, NGX, Mr. Temi Popoola, stated, “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 program.”
The Divisional Head, Trading Business, NGX, Mr. Jude Chiemeka also 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. There are also the benefits of increased liquidity, greater market depth, enhanced portfolio diversification, and more, that other capital market players will enjoy. 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.”
It would be recalled that NGX first launched the Market Making program 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.