THE Nigerian Stock Exchange (NSE), on Tuesday, called on major asset holders such as Assets Management Company of Nigeria, Pension Fund Administrators, insurance companies, among others, to participate in the market making initiative, scheduled to take off next week Tuesday.According to NSE Chief Executive Officer, Oscar Onyema, the entities can alsoearn additional income through the process, while helping to improve liquidity in the Nigerian market.Speaking at a market making workshop, Onyema explained thatfor market making to be vibrant, the securities lending and short selling structures being put in place to support the process must be leveraged on.He urgedallstakeholders to actively understand the mechanics for effecting securities lending and borrowing, as well as short sale transactions.'I will like to assure all stakeholders that the introduction of Market Making should help to drive liquidity in the market place to the benefit of Retail Investors, Institutional Investors, the Broker Dealer Community as well as Regulators', said Onyema.'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.'Explaining further on the modalities,Onyema said the market making programme will be carried out in phase of limited securities at a time, informed the financial market community that the market will roll out the rest of the securities over a period of six months.'We are going to roll out over a six months period. Duringthat period, we are going to learn a lot. There'sbeen a lot of efforts that has gone into this. When it comes to the ability in lending securities, we know that AMCON will lend the credit. With regards to retail participants, we want to start with professionals (institutional investors) to manage the risk and the process. The whole idea at the end of the day is to improve the market quality.'The primary market maker will bethere to provide liquidity where you don't have liquidity. By allowing a very symmetrical market there will be a lot of sanctions for defaulters,' the NSE boss added.In his submission, the Head of Transformation at NSE, Olumide Lala said the lower/upper trading limit will be increased from five per to ten per cent for securities that get rolled out into the programme.Henoted that no 'naked selling' will be entertained in the operation of Market Maker on the Exchange, adding that covered selling will be allowed even as there will be no failed trade.Prominent among firms selected by the ten Market Makers to act in the pilot scheme includes PZ Cusson, Presco, International Breweries Plc, Lafarge Cement Wapco Nigeria Plc, Fidson Healthcare Plc, Redstar Plc, DN Meryer Plc, Diamond Bank Plc, Fidelity Bank Plc, Nigerian Breweries Plc, Guaranty Trust Bank Plc and UAC Nigeria Plc.
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