NSE adopts new measures to tackle capital market liquidity constraints

The Nigerian Stock Exchange (NSE) yesterday, announced new measures to change the structure of its Market Making concept and regulation rules this year.

This followed its dissatisfaction with the level of participation in the initiative over the years.

Its decision to effect changes in the Market Making structure in 2018 was part of measures to tackle liquidity constraints and ensure sustained flow of funds in the capital market.

Already, it has commenced engagements with market participants to ensure that the restructuring exercise takes effect in the shortest possible time.

Market making involves entering bids and offer prices in the automated trading system for securities specified by the NSE as available for market making under its stipulated conditions. Market makers profit by charging higher offer prices than the bid prices.

A Market Maker is Dealing Member of the NSE who has, after being appointed by the Exchange, undertakes to enhance the market liquidity of particular securities in accordance with NSE rules.

The primary role of a Market Maker is to maintain a fair and orderly market in its particular securities and to contribute to the operations of the market by ensuring that buyers and sellers of securities could transact.

Chief Executive Officer of the NSE, Oscar Onyema, made the clarifications while addressing journalists at the presentation of 2017 Market Recap and Outlook for 2018 yesterday.

He said: “We are not satisfied with their rate of participation and how they catalyse growth in the market, especially when we really needed them to participate in the commodity down cycle.

“We are looking at it critically and we have engaged with the market makers and other market participants and in 2018 you will see a significant change in the structure of market making and its rules.”

For the Alternative Securities Market (ASEM), Onyema explained that the market segment has not enjoyed the liquidity needed to boost the sector.

He, however, disclosed that the exchange plans to introduce a growth board that would cater to a different category of companies and deemphasise the ASEM platform over time.

“We like to have the growth board, the main board and premium board on the same level but catering to different companies in relation to what we had in the past where we traditionally think of ASEM as junior companies, while the main board and premium board are considered as senior companies.

Speaking on the voluntary delisting of firms’ from the NSE, the Executive Director, Regulation, Tinuade Awe, said the exchange has enhanced its rules to ensure that firms behave in an orderly manner, especially companies that desire to delist voluntarily.