Vanguard (Lagos)

3 February 2013

Nigeria: NSE Seeks Stockbrokers' Support On Fixed Income Retail Trading

The Nigerian Stock Exchange, NSE, Friday appealed to Dealing member firms of the Exchange to assist in getting more of their clients to partake in the fixed income market through the newly introduced retail window.

The NSE officially commenced retail trading programme on fixed income securities on Friday, February 1st, 2013, with investors taking up 510,000 units of fixed income instruments valued at N600,000 in 13 deals.

The transaction cut across the three fixed income asset classes listed on the NSE's official list, which include the FGN bonds, State Government bonds and corporate bonds.

The NSE's Chief Executive Officer, Mr. Oscar Onyema, who addressed journalists at the end of transaction on Friday, said that the volume recorded was impressive, adding that it proved the concept that bonds trading could be done in small units.

"We want to appeal to you to reach out to your clients and inform them that trading on fixed income securities has commenced today. Though the number we saw today was small, but I am sure that it can only get better as patronage improves," he said. "Actually, there were lots of quotations in the system. If you look at the system, the market makers were quoting. So, if there were natural orders coming, we would have done a lot more trading than what we did today. Today is really the beginning, and we are expecting that we should see bigger volumes and values traded as time goes on," he added.

He noted that he is optimistic that it would drive activities in the primary market, especially from the corporate with the knowledge that they can actually participate on a retail basis from the floor of the Exchange.

Speaking on how stockbrokers and market makers view the new avenue to bonds trading, Onyema said, "We are all excited that we have another product to trade and to offer our clients asset classes to get appropriate diversification. As you know, we did about 13 trades, totaling a little over N600, 000. So, it is a small beginning, but it proves the concept that people can do bonds trading in small units and that people can actually take position, because it cuts across the market makers and broker dealers and that actually participated in the market today.

He emphasized that the commencement of fixed income trading on retail basis does not foreclose transactions in Over-the-Counter, OTC market, saying, "Our offering is very complementary to what you have in OTC market. So, the OTC market is very institutional; the ticket sizes are bigger. What we are doing is really try to bring in retail participants into the fixed income market."

He enjoined investors to take advantage of the system, saying "We have a viable platform that allows them to diversify their portfolio and hence manage the risk of exposure into the capital market using well established channels. They have their stockbrokers; they can speak to their stockbrokers and the stockbrokers will work them through how they can access the market, and they will get one statement for equities, bonds and Exchange Traded Funds."

The NSE had recently appointed six market makers to boost transactions in fixed income securities on the Exchange.

The six market makers include Capital Bancorp, DunnLoren Merrifield, Greenwich Securities, Cordros Securities, FSDH Securities and GTB Securities Ltd.

The NSE had said that the companies were appointed from 14 that applied.

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