Activities of supplementary market makers will begin today (Tuesday) on the Nigerian Stock Exchange.
The supplementary market makers are to act as a backup to the 10 primary market makers, which are already functioning on the equities market.
The NSE had last week said the need for supplementary market makers became necessary with each stock having one primary and two supplementary market makers.
The Executive Officer, Market Operations and Technology, NSE, Mr. Adeolu Bajomo, who announced this, said following the completion of the six-month rollout period for the primary market making in equities, there was the need for the activities of the supplementary market making firms to commence.
He added that their activities were important in the equities market as they would drive liquidity and ensure that the market remained relatively stable.
“As we are all aware, the activities of primary market makers began last September, in which there were 10 companies that made market for a couple of stocks for a period of six months,” Bajomo said.
He added that the commencement of the supplementary market making would boost activities in the equities segment of the NSE as it would go a long way towards increasing investors’ confidence, deepening the market and increasing liquidity in the market space.
The Executive Officer, Business Development, NSE, Mr. Haruna Jalo-Waziri, said unlike the selected primary market makers, who were 10 in number, there was no limit to the number of the supplementary market makers.
He explained that any broker-dealer firm that met the requirements to carry out the functions would be selected by the NSE, adding that supplementary market makers could go ahead to apply to become primary market markets.
“The good thing about their appointment is that unlike before, when we had a 10 per cent band for only stocks included in the market making basket, all stocks would now have the 10 per cent band following the commencement of their activities,” he said.
Jalo-Waziri added that there would be a one-year rollout period for the supplementary market makers.