By Yakubu LAAH investadvocate

Feb 23 2011 17.20 GMT

Lagos (INVESTADVOCATE)-The Nigerian Stock Exchange (NSE) has affirmed that its trading platform ‘Horizon’ designed and maintained by NASDAQ OMX is fully equipped for Bonds trading.

This was contained in a Statement Wednesday February 23 2011 by its management and made available to investadvocate in Lagos Nigeria.

The NSE affirmed its trading platform has the capacity to support trading in Equities, Fixed Income Securities (Bonds, Debentures, Treasury Bills, etc) and Derivatives. “The platform supports two-way quotes; that is, price to buy and price to sell” the Statement said.

According to the Nigeria’s Exchange, the trading platform which was installed at the inception of Automated Trading System (ATS) on The Exchange in 1999 has been very effective. “It combines auction-style trades, Direct Trading, Negotiated Deals and Quote Market” the NSE said.

It also described the Quote Market as an implementation of a quote-driven market model where Market Makers place a two-way quote that is a bid (buy) and an offer (sell) price at the same time. “These quotes are matched against orders from market participants on a price-time basis. This means that the basis of allotment is on price and time of entering the order” it affirmed.

This, Nigeria’s Exchange further said is different; when compared with Over-the-Counter (OTC) Market; where transactions are between two parties (that is the buyer and the seller), “the Quote Market supports many-to-many call auction where many dealers trade at the same time.  This encourages transparency in price discovery” the NSE noted.

Also, The Exchange said its Bonds Trading Platform has various means of trading depending on the options acceptable to the Market Operators and Regulators.

“The Trading options include: Order Driven Market for Retail Traders and Quote Driven Market for Market Makers. With these options, the trading facility on The Exchange has the ability to cater for both the Wholesale and Retail Markets for Fixed Income Securities” the NSE said.

The NSE further affirmed that its current Trading Platform of has the facilities that allow Brokers/Dealers to change a former order, cancel un-filled orders, check outstanding orders, suspend and resume an order. “It also supports both Dirty and Clean Pricing. The Dirty Price of a Bond is the value of a Bond exclusive of accrued interest, while the Clean Price is inclusive of accrued interest” it said.

“One of the advantages of the NSE Bonds Trading Platform over the OTC Market is price discovery. The true value of the instrument is derived. This makes pricing highly transparent. Allotment can be based on: FIFO (First-in, First-out); Equal allotment; Pro rata; Member equal lot and Member Pro rata. The closing price of any security can be determined by Last Trade Price or Weighted Average” the NSE Management affirmed.