February 29, 2012
The Nigerian Stock Exchange has announced that its activities of market making in the equities market would begin in March.
The Exchange also announced that out of the 17 applications received from stockbroking firms for market making, it would be appointing 10 companies.
The Chief Executive Officer of the NSE, Mr. Oscar Onyema, announced this during the 2012 Standard Bank West Africa Investors’ Conference in Lagos on Tuesday.
A market maker is a dealing firm, which maintains firm bids and offers prices in a given security by standing ready to buy or sell that security.
The NSE had, last year, embarked on the project of getting market makers as one of the major strategies aimed at increasing investor confidence, deepening the market and addressing the lack of liquidity in the market.
According to Onyema, the introduction of primary market makers is important in the area of shoring up liquidity and depth in the market. He added that it was awaiting the approval of the Securities and Exchange Commission.
He said, “The Rules and Guidelines have been submitted to SEC for approval; we received a total of 17 applications from the Broker-Dealer community, which concurrently are going through a rigorous and transparent selection process that we instituted.
“Under this programme, each security will be assigned one primary market maker; and we plan to select 10 primary market makers and to start rolling out the programme, in conjunction with other market structure enhancements, by March this year 2012.”
The CEO also announced that following the approval of the SEC share buy-back guidelines, companies were allowed to buy back up to 15 per cent of their shares.
“Companies are now allowed to buy back up to 15 per cent of their shares which must be retired. And to guard against manipulation, companies may not issue the same types of securities for a period of one year,” he said.
Also speaking at the conference, the Chairman Stanbic IBTC Bank Plc, Mr. Atedo Peterside, noted that foreign investors were still tending towards investing in the frontier markets because of the vast opportunities inherent in the sector.
He said, “I consider this forum very important and timely as I believe that Nigeria has entered a critical phase during which we can either accelerate the realisation of our vast economic growth potential or watch it slip and fizzle out.
“And so at this time, when the Southern European economies are still reeling in the throes of recession; with the American economy stuttering towards a recovery, in an election year, emerging market and frontier investors are increasingly looking at growth stories in African economies with interest and Nigeria is at the epicenter of this growth story.”