Ahead of the start of market making activities in the equities market on Tuesday (tomorrow), market analysts have called on regulators to ensure adequate supervision of the process.

Analysts, who spoke in separate interviews with our correspondent on Friday, noted that the process needed to be well monitored to ensure transparency.

This, they noted, was essential to maintain the current upward trend recorded on the Nigerian Stock Exchange within the last few weeks.

A market maker is a dealing firm who maintains firm bid and offer prices in a given security by standing ready to buy or sell that security.

The NSE had, last year, re-embarked on the project of introducing market makers as one of the major strategies to increase investor confidence, deepen the market and address the lack of liquidity in the market.

The analysts noted that if properly carried out, the process was capable of ensuring increased participation and activities in the market.

For instance, the Managing Director, Proshare Nigeria, Mr. Olufemi Awoyemi, said that market making would help to bring more life into the equities market, adding that it was therefore essential that the process was handled with caution.

He said, “Market making is a good initiative with so many prospects if the operators and market participants can stick to the principles that will make it function the way we want, and we expect operators to play by the rules.

“A high level of market efficiency and transparency will help to lubricate the effectiveness and impact of  market making in boosting market activities further, which will of course stage the full recovery process of the Nigerian stock exchange. 

“In addition, the market surveillance obligation needs to be on point at this time to checkmate smart practices such as naked shorting.”

Awoyemi noted that apart from the liquidity in terms of funds, it  would  bring to the market, it would also inject life into market activities.

“We expect this initiative to create sustainable market activities soon while it will naturally create more avenues for huge revenue to both stock owners and traders on the bourse rather than the usual boring buying and selling,” he stated.

On his own part, the Managing Director, Crane Securities Limited, Mr. Mike Eze, said that the expected start of market making had also contributed significantly to the upward trend recorded in the market in the last few weeks.

He said, “The news of the market making process which was announced by the NSE has also played its own part in the bullish outlook of the market within the period under review.

“However we believe that since the bulls are back, the government should try to implement the forbearance package policy which was agreed upon between government, regulators and operators.”

Source: Punch/Udeme Ekwere