Market Makers Buoy Liquidity In Stock Market – Operators

Key operators in the Nigerian capital market have agreed that the market making process introduced in the stock market recently has boosted liquidity in trading activities.

The Chartered Institute of Stockbrokers (CIS) said there is still lots of gap in the equities market that investors are yet to take advantage of, noting that many stocks in the market have very good net asset value, but that their current prices on the floor of the Exchange were far below their net value.

According to the CIS President Mr. Olushekun Ariyo, “Inclusion of the Market Makers has been able to provide liquidity. By the time they are going into every other stock, we are bound to see more activities coming up in the market.

Recall that since the debut of the Market Makers, activities in the market have been on the upswing with pockets of losses largely occasioned by investors capitalising on appreciation in prices of stocks to take profit.

Market Makers in every economy where shares and securities are traded usually play their role in stabilising the equities market and also? guide against price fluctuations, which may be to the detriment of investors.

The Market Makers who are dealing firms often bid and offer prices in a given security by standing ready to buy or sell that security.

The NSE is attempt to help deepen the equities market had resulted in the Self Regulatory Organisation taking the giant stride with the inaugurated of 10 market makers on the floor of the Exchange last year.

According to the NSE Chief Executive Officer, Oscar Onyema, who regarded the development as another milestone in the history of the Nigerian capital market, said the stock broking firms were selected from a list of 20 that had applied.

The market makers as announced by the NSE are Stanbic IBTC; Renaissance Capital; Future View Securities; Vetiva Capital; ESS/DunnLoren Merrifield; WSTC; Capital Bancorp; FBN Securities; Greenwich Securities and CSL Stockbrokers.

Onyema said, “This is a great milestone and a major step in the direction of turning the market round to bring liquidity and depth back into the market. We will continue to move forward on this.

“The companies selected went through a very rigorous process and met the minimum net capital requirement of N570million; we also examined their compliance history and looked into their operational capabilities including their technology and processes.”