Market making activities commenced officially on the Nigerian Stock Exchange on Tuesday, beginning with 16 selected quoted companies.

Also, the NSE increased the daily price limit for the selected stocks’ movement from the usual five per cent to 10 per cent.

Some of the companies selected by the 10 market makers to act in the pilot scheme included PZ Cussons Plc, Presco Plc, International Breweries Plc, Lafarge WAPCO Cement Plc, Fidson Healthcare Plc, Red Star Plc, DN Meyer Plc, Diamond Bank Plc, Fidelity Bank Plc, Nigerian Breweries Plc, Guaranty Trust Bank Plc and UAC of Nigeria Plc

The move to introduce market making into the Nigerian equities market was revived last year as one of the major strategies aimed at increasing investor confidence, deepening the market and addressing the lack of liquidity in the market.

A market maker is a brokerage firm or bank that maintains a firm bid and ask price in a given security by standing ready, willing, and able to buy or sell at publicly quoted prices.

Activities of the market makers helped to firm the bullish trend on Tuesday as equity trading activities remained positive.

The NSE All-Share Index rose by 0.3 per cent or 82.18 basis points from 25,373.83 basis points on Monday, to 25,456.01 points on Tuesday.

Similarly, the market capitalisation of the listed shares rose by 0.3 per cent or N27bn to close at N8.104tn up from N8.077tn recorded the preceding day.

The Chief Executive Officer of the NSE, Mr. Oscar Onyema, had explained that market making would go a long way to boost activities in the equities market, adding that investors were in for good times.

He said, “I will like to assure all stakeholders that the introduction of market making should help to drive liquidity in the marketplace to the benefit of retail investors, institutional investors, the broker dealer community as well as regulators. 

“The introduction of securities lending should drive efficiency through the market; and implementation of short selling should allow for a more symmetric market as investors can impose more discipline on quoted companies.  All of this should improve the price discovery process and thus reflect the true value of companies.

 ÃƒÂ¢Ã¢â€šÂ¬Ã…“I believe you will agree with me that the market is in for better times with the introduction of the market making, securities lending and short selling initiatives. Let us collectively give it all the support it needs, especially during the six month rollout period.”

The Managing Director, Lambeth Trust and Investment Company Limited, Mr. David Adonri, told our correspondent that the move to introduce market making was one that would ensure less volatility in the market.

He added that so far, investors’ confidence seemed to be returning to the market as a result of these moves.

Source: Punch/Udeme Ekwere