NSE to commence short selling, securities lending




July 26, 2011    
The Vanguard reports that the Nigerian Stock Exchange (NSE) intends to commence securities lending and short selling.
Mr. Oscar Onyema, Chief Executive Officer, NSE, said the Exchange is collaborating with industry participants to ensure a smooth take off of the proposed initiatives.
He lamented the fact that traders only make money in Nigerian market today when the market goes up, saying that participants should be able to make money whether the market is up or down if they can short securities.
He also promised that his management would encourage and support the introduction of Hedge funds into Nigerian capital market and he highlighted trading of bonds in the secondary market, among others as priority areas.
Short selling is the selling of a security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller. In short selling, sellers assume that they will be able to buy the stock at a lower amount than the price at which they sold short. Security lending, on the other hand, is a loan of a security from one broker/dealer to another, who must eventually return the same security as repayment. The loan is often collateralized. Securities lending allows a broker-dealer in possession of a particular security to earn enhanced returns on the security through finance charges.
Source: Vanguard/ Michael Eboh
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