12 September 2012

Nigeria: NSE Warns Market Makers Against Violation of Rule

Onyema gave this warning at a one-day workshop organised on "Market Making, Securities Lending and Short Selling Programme," also said such an operator would pay a monetary fine of 10 per cent of the value of the transaction.

According to him, market making would commence September 18 while the roll out process would be for a period of six months.

"The selected market makers are committed to ensuring that the objectives of introducing this initiative into the market will be achieved. The exchange has worked tirelessly with these market makers, securities lending agents, and indeed key regulators to get us to this point today.

"We need all stakeholders to actively understand the mechanics for effecting securities lending and borrowing, as well as short sale transactions. We encourage major asset holders such as Asset Management Corporation of Nigeria (AMCON), Pension Funds Administrators, Insurance companies and other entities to participate and earn additional income through the process, while helping to improve liquidity in the market," he said.

Apparently to improve the liquidity position in the market, First Bank of Nigeria Plc and CitiBank Nigeria Limited would soon become security lenders to join United Bank for Africa Plc and Stanbic IBTC Bank Plc, which have earlier been approved by the Securities and Exchange Commission (SEC) to perform that duty in the market making environment.

Giving more details on how the programme would work, Head of Transformation at NSE, Mr. Olumide Lala, said the lower and upper pricing limit would be increased from five per to 10 per cent for securities that get rolled out into the programme.

Lala added that there would not be naked selling (selling securities you do not own), assuring that there would not be failed trade.

According to him, 12 securities had been selected by the 10 market makers to act in the first phase of the programme.

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