SEC DG, Arunma Oteh
Following the take-off of market making activities in the Nigeria stock market, stakeholders and analysts have called on the Securities and Exchange Commission (SEC) to ensure adequate supervision of the process.
Stockbrokers’ who spoke to THISDAY on condition of anonymity, stressed that effective regulation was essential to maintain the recent rebound of equity prices in the capital market.
Market making is a situation where special type of stockbrokers hold a certain number of shares in their inventory for the express purpose of selling them to a bidder at a future date.
If properly carried out, analysts believe the process is capable of ensuring increased participation and activities in the market.
Managing Director of Huntingfield Capital Limited, Mr. Onye Onwuka, said that market making would help to bring more life into the equities market, adding that it was therefore essential that the process was handled with caution.
“Market making is a good initiative with so many prospects if the operators and market participants can stick to the principles that will make it function the way we want, and we expect operators to play by the rules. The regulators must ensure periodic review of the process.
“A high level of market efficiency and transparency will help to lubricate the effectiveness and impact of market making in boosting market activities further, which will of course stage the full recovery process of the Nigerian stock exchange. Also, market surveillance obligation needs to be on point at this time to checkmate smart practices such as naked shorting.”
He stressed that apart from the liquidity in terms of funds, it would bring to the market, it would also inject life into market activities.
“We expect this initiative to create sustainable market activities soon while it will naturally create more avenues for huge revenue to both stock owners and traders on the bourse rather than the usual boring buying and selling,” he said.
He added that the take-off of market making had also contributed significantly to the upward trend recorded in the market in the last few weeks.