By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-13 Bank Stocks are dominating the Nigerian Stock Exchange’s (NSE’s) Market Making Programme which commenced September 18 2012.
Six (6) Banking Stocks were traded on inception; these include Sterling Bank Plc, Fidelity Bank Plc, Zenith Bank Plc, Guaranty Trust Bank Plc (GTBank), Diamond Bank Plc and First City Monument Bank Plc (FCMB).
Subsequently in October 2012, Access Bank Plc, Union Bank of Nigeria Plc (UBN) United Bank for Africa Plc (UBA), Ecobank Transnational Incorporated (ETI), Skye Bank Plc and First Bank of Nigeria Plc (FBN) made the list; while Unity Bank Plc joined November 2012.
The NSE at inception said Market Makers will play a central role in the provision of two-way quotes (comprising of buy and sell prices) for the Securities that they are making Markets on.
Also, leveraging the Securities Lending process, Market Makers will be able to borrow Securities in order to settle “buy order imbalances from customers. A Market, allowing both Market Makers to provide two way quotes and licensed Broker/Dealers of The Exchange to submit orders as is currently done, was operated from the commencement date of this key initiative.
The NSE said the importance of Securities Lending in the Market Making initiative would provide for lending and borrowing of Securities which in return will enable investors earn returns on their “Idle Stocks whilst contributing significantly to Market Liquidity and Price Efficiency through legitimate investment activity in covered Short Selling.
It would be recalled that the Nigerian Bourse announced the names of the initial Market Makers on its Trading Floor in the Second Quarter (Q2) of year 2012 following a rigorous selection process, where the NSE unveiled ten (10) Broker/Dealer Firms selected as Market Makers.
In describing the event, Oscar Onyema, Chief Executive Officer (CEO) of the Nigeria’s Exchange said Market Making is a major landmark in enhancing the liquidity and depth of the second largest Market in sub-Saharan
Its all the stocks quoted on the Exchange that are trading above par value will be added to the Market Making programme over a period of six months.
According to the NSE, for instance, the Market Capitalisation and All-Shares Index (ASI) that was at N8.077 trillion and 25,373.83 respectively on the eve of the commencement, stood at N8.628 trillion and 27,077.66 at the close of trading activities on Monday, October 15, 2012, representing an increase 6.8%.
