As part of efforts to deepen the market, enhance its liquidity and increase efficiency across asset classes, the Nigerian Exchange Limited (NGX), on Thursday announced plans to relaunch its market-making programme effective October 4, 2021, nine years after it was first mooted in 2012.

A statement by the NGX listed the Market Makers across its product classes as ABSA Securities Nigeria, CSL Stockbrokers, Vetiva Securities, Stanbic IBTC Securities, Chapel Hill Denham Securities, FBN Quest Securities, and United Capital Securities.

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.

Consequently, the exchange recently reviewed its rules to ensure 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).

Commenting on the programme, Chief Executive Officer of the NGX, Temi Popoola, expressed the NGX’s commitment “to tackling liquidity constraints and ensuring sustained flow of funds in the capital market.

“We recognize 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 (Central Securities Clearing System) for their contribution towards the relaunch of the programme.”

Also speaking, the Divisional Head, Trading Business, NGX, Jude Chiemeka explained that the benefits of market-making cut across the spectrum of our market, adding that players under the programme “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,” he stressed.

The relaunch takes into consideration the evolving needs of stakeholders and will allow for periodic adjustments to meet the objectives of the programme, the statement added.