In a couple of weeks, Securities Lending Agents (SLAs) will commence confidence test in securities lending, sources at the Nigerian Stock Exchange (NSE) close to the programme, told INVESTOR.
Securities lending is an integral part of the Market Making Programme, which the NSE rolled out September 2012.
“We have recorded some progress in our drive to kick-off the programme. The Securities and Exchange Commission (SEC) has registered Stanbic IBTC Bank plc, United Bank of Africa plc, First Bank plc and Capital Bancorp plc as SLAs. The SLAs agreements/proposals are currently being reviewed by the Asset Management Corporation of Nigeria (AMCON). The SLAs themselves will soon commence confidence test in securities lending in a couple of weeks,” our source said. The AMCON is to make some of its securities holdings available for securities lending, as part of its efforts to enhance liquidity in the stock market.
One of the initiatives adopted by the Exchange to increase liquidity and revive investors’ confidence is the Market Making Programme. The Primary Market Making Programme was rolled-out in mid-September 2012, with significant impact on trading volumes.
For the securities for which market makers were appointed, average daily volume traded computed over the three months prior to the Market Making Programme (June 2012 to August 2012) compared with the average daily volume traded of the first three months of 2013 (January to March 2013) has increased from 229.5 million shares to 322.9 million shares, which represents a 40.65 percent increase.
Similarly, average daily value increased from N1.840 billion to N3.425 billion, an approximate increase of 86.18 percent. Compared with the similar three month period for 2012 (January 2012 to March 2012), the increase in daily average volume traded and value traded are 38.87 percent and 76.42 percent, respectively. This shows the positive impact of the market making on liquidity and market performance. At the end of the Primary Market Making Programme roll-out period, 13 Supplemental Market Makers were appointed to complement the effort of the Primary Market Makers.
“The Exchange has also strengthened the regulatory environment with the introduction of New Listing Rules, The Broker Trax Tool, X-Compliance Report, X-Issuers Portal, and other initiatives. The launch of some of our first-rate investor protection programmes such as the Financial Literacy Programme and the Investor Protection Fund, both of which are geared toward reviving investors’ confidence, have yielded positive results,” our source said.