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NSE to unveil supplementary market makers April 2

By on March 26, 2013

• Increases equities price limit to 10

THE Nigerian Stock Exchange (NSE) will unveil supplementary market makers on April 2.

Briefing the press yesterday, the Executive Director for Market Operations, Ade Bajomo said that the market makers would complement the activities of primary market makers introduced in September, 2012.

Besides, he said that on that date the circuit breaker for all quoted stocks on the NSE would move 10 per cent upward.

According to him, the aim is to ensure liquidity in the capital market.

He said that the minimum requirement for each supplementary market maker would be N250, 000 and that the exchange had received 20 applications.

Bajomo said that the exchange would ensure there is no limit to the number of supplementary market markers, adding that whoever qualifies would be picked.

He also said that the NSE will as from April increase the maximum daily price limit to 10 per cent for all equities listed on the Nigerian bourse. At present, about 52 stocks that are in the market making basket record daily price swing of 10 per cent, while others outside the basket record only five per cent.

Bajomo explained that all equities will record a maximum price movement of 10 per cent either up or down.

According to him, the decision to raise the price limit was informed from the feedback received in the six months of the market making programme, which he said would enter the second phase in April.

He disclosed that apart from adopting a new price limit, the NSE will also unveil supplementary market makers to complement the efforts of the 10 price market markers appointed last April to commence the programme last September.

The executive director said that the introduction of market marker initiative had increased the market liquidity and the number of retail participations.

Bajomo said that the NSE daily average volume transactions had increased from 17 million dollars in 2012 to 25 million dollars by March due to the market making initiative.

Circuit breaker is the percentage at which a price of any quoted company can move up or down on daily basis.

Before now, only market making stocks were allowed to move up to 10 per cent while others remained at five per cent during transactions.

The NSE introduced market makers in 2012 to settle buy order imbalances from customers through the provision of liquidity.

Market makers are rated according to the level of liquidity support they provide.

“When the market making programme started, we said the roll out for the first phase would be for six months. That we have completed and we moving to the second phase. By first week of April, we will announce supplementary market makers while the price limit would be increased for all stocks across board,” he said.

Explaining further, the Head Products Management, NSE, Dipo Omotoso, said 23 stockbroking firms applied to be appointed supplementary market makers.

According to him, each supplementary market maker is expected to have a net capital of N250 million as against the N500 million requirement for primary market maker.

“We received 23 applications and the successful ones would be announced after going through their compliance history and other required checks. Unlike the primary market makers, the supplementary market makers would enjoy 50 per cent NSE fee waiver compared with 100 per cent waiver enjoyed by primary market makers,” he said.

 

( Guardian)