The Nigerian Stock Exchange (NSE) has explained that financial capability, compliance and performance history as well as operational capability were the main criteria used in selecting the thirteen supplemental market makers (SMMs) meant to drive liquidity in the capital market.
The thirteen were selected out of the twenty-three (23) companies that applied to complement the role of the primary market makers (PMMs) in deepening liquidity in the capital market.
According to the Nigerian bourse, the supplemental market makers which include Capital Assets, Capital Bancorp, Cordros Capital, FBN Securities, and FCSL Asset Management have already started operations.
Others are FSDH Securities, Greenwich, Investment One, Partnership Investment Company, Magnatis, Renaissance Capital, Stanbic IBTC, and UBA Stockbrokers.
The ten companies whose applications were not considered for this role are EDC Securities, Global Asset, Morgan Capital, Meristem, Valueline, Tradelink, CardinalStone, ARM, Lead Capital, and Future View.
Abdulazeez Babalola, head of surveillance at the Nigerian Stock Exchange, said that due process was embarked upon in appointing the thirteen supplemental market makers.
On compliance history, factors considered were number of complaints within the last five years, number of complaints resolved, number of complaints outstanding, prompt rendition of accounts (audited and quarterly returns), and number of times the firm was suspended for any regulatory issues.
Also, on operational capability/performance history, factors considered were trading infrastructure, trading operations, risk management tools, and activity in the last five years (both primary and secondary market).
Also, the criteria used in allocation of securities to the supplemental market makers were order of preference, net liquid capital, past performance (volume and value traded), and compliance history.
Haruna Jalo-Waziri, executive director, business development, NSE, said the timely initiative would help create a favourable environment for competition and rapid transformation in the Nigerian capital market, adding that it was a major strategy by the Exchange to increase investors’ confidence, deepen the market and address lack of liquidity.