Tuesday, April 24, 2012 / Proshare Polls
 

The Nigerian Stock Exchange recently unveiled market makers in the Nigerian Capital Market which is expected to provide liquidity in the system. They are expected to accept the risk of holding a certain number of shares of a particular security in order to facilitate trading in that security. i.e. maintains firm bids and offers prices in a given security by standing ready to buy or sell that security.
 

Earlier, the Exchange had announced that its activities of market making in the equities market would begin in March. It also said that out of the 17 applications received from stock broking firms for market making, it would be appointing 10 companies.
 

The activities of the market makers are expected to deepen the market and address the lack of liquidity with the NCM. This expectation is not without some areas of doubt, uncertainty and concern.
 

Proshare sought to find out from the market how it views the development. Find below the POLL results and interpretation.

Interpretation
The poll, which was conducted within the space of one week, was meant to gauge the opinion of the market stakeholders and investing public on whether the appointed market makers will make a difference in the Nigerian Capital Market and the following data analysis showed the view of the respondents.

137 respondents, representing 92.25% of the entire poll population, are of the view that the appointed market makers will make a difference in the Nigerian Capital Market. 
 

Of the population size, 3.88% or 6 persons are of the opinion that No major impact will be felt unless a bubble is created.

A further two sets of respondents’ (total of 3% of population polled) believe that, the problem is about liquidity, not just unavailability of shares which is corrobated by the view of the second group who are of the view that Market Makers are not useful in a down trending market without a primary market. Obviously, the above 2, 3 and 4 groups are in the insignificant minority.

The last respondent with 1% representation believes it is the first step amongst a series of actions that should be taken.  
 

It would seem that the outcome of the poll affirms the decision to introduce the market markers at this time. The respondents are motivated by the expectation that this initiative will impact the market slide and help in its rebound. For further insight into the demographics, kindly write to info@proshareng.com

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