Market makers: NSE seeks banks' support for liquidity

The Nigerian Stock Exchange (NSE) Wednesday said it will be engaging the commercial banks on the need to provide liquidity support to the recently appointed Fixed Income Market Makers  to help optimise their operation.

This position was disclosed by the NSE's Chief Executive Officer, Mr. Oscar Onyema, at a training organised by the Exchange to acquaint stockbrokers and financial journalists on structure of retail bond trading.

His disclosure followed the concern that the major inhibiting factor to the success of the market makers both in the equity sector and bond market will be that of access to banks loan to assist market makers execute their mandate of ensuring equilibrium in the market.

He allayed fears that trading bonds on retail basis will create unnecessary competition with OTC bond market, saying that the retail market is not just there to complement OTC market, but to introduce greater efficiency in the system.

Onyema explained that unlike the equity market where the market makers have basket of equities in their portfolio, all the appointed fixed income market makers will have the opportunity of trading on all eligible bonds, including Sovereign, Non-Sovereign and Corporate bonds.

He further stated that with inclusion of FGN bonds by Morgan Stanley in its emerging market index, and planned inclusion by Barclays, it would be unfair for the Exchange to deny foreign investors access to fixed income market via the trading on the floors of the NSE.

Onyema disclosed that the capitalisation of the bonds market in Nigeria increased by significant 55.6 percent in one year, rising from N3.74 trillion in 2011 to N5.82 trillion in 2012.

He affirmed that bonds market still possesses potential for further growth, owing to the infrastructural needs of the country which the government is trying to address.

'The fixed income market making will increase accessibility of the bonds market to the investing public. Until now, the bond market was mainly accessible to the institutional, Corporate and other High Networth individuals through Over-the-Counter, OTC, market. With the introduction of the FIMM programme, all investors will now have easy access to the bond market through their broker/dealers via the NSE's Automated Trading System,' he further stated.