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NSE kicks off supplemental market making programme to drive liquidity

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The Nigerian Stock Exchange,NSE, has announced the appointment of 13 Supplemental Market Makers (SMMs) in an effort to complement the role of primary market makers, PMMs, in driving liquidity in the capital market.

Executive Director, Business Development, NSE, Mr Yalo-Waziri said the SMMs would aid the PMMs in providing two way quotes for each of the stocks they make market in so that “At any point in time anybody goes to the market with good stocks, they will be taken care of.”

Waziri said that the NSE considered the net liquidity of the companies in terms of capital, their compliance level, as well as how many issues they have sponsored, adding and “We actually looked at companies that are capable and strong enough to market make on these stocks. Those are the ones that were taken.”

“When we market make, it provides two prices for quote, bid and offer. What happens is that it gives that stock some level of liquidity so that when you bring the stock into the market, somebody will be able to take it off you and by that, if there is no market making in a particular stock, unless there is a demand for it, you can not get it but market makers provide both demand and supply end of it so that there is movement in terms of liquidity for the market.”

It would be recalled that the Head, Corporate Communications, NSE, Bola Adeeko, had said that last week while briefing capital market correspondents on recent developments in the market that 27 applications were received, even as he added that as many company as have the qualification would be allowed to partake in the supplemental capacity.

According to him, the commencement of supplemental market making would birth full market making programme. He added that for each stock in the portfolio of market makers, two PMMs and one SMM would be assigned.

Adeeko informed that any supplementary market maker that outperformed the primary market maker could apply for elevation and could as well take over from PMM that falls below its obligation.

Interested parties are required to have net capital liquidity of N250 million; for a PMM that also wants to play in that capacity, he would be required to possess N250 million, in addition to N500 million and N750 million capital requirement for PMM and broker dealer roles respectively. Stockbrokers that want to play the role are required to have the basic N750 million capital base, as well as additional N250 million.

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