The Moment (London)
Ngozi Amuche
30 December 2011
SOME capital market operators on Thursday have said that the inability of interested dealers to raise stipulated capital was responsible for the late appointment of market makers.
They said that the gloomy nature of the market was compelling dealers to shy away from the high risk investment decisions.
A market maker is a broker-dealer firm that accepts the risk of holding a certain number of shares of a particular security to facilitate trading in that security.
The Nigerian Stock Exchange (NSE) had in its efforts to boot investor confidence fixed N500 million as the minimum capital requirement for the market makers.
Mr Eugene Ezenwa, the Chief Executive Officer, Pac Securities Ltd., said that the scheme was delayed because interested market operators were yet to raise the minimum capital base of N500 million.
Ezenwa said that the Exchange needed to put the necessary infrastructure in place before the scheme would take off as market marking involved technology and skills.
“Besides, interested market operators need more time for the nation’s economy to stabilise,” he said.
Ezenwa stated that the planned re-invigoration of market would be attained if the regulators approached it scientifically.
Malam Garba Kurfi, the Chief Executive Officer, APT Securities and Funds Ltd., said that some operators were sourcing funds to meet the requirements.
Kurfi advised that the Stock Exchange should liaise with the Central Bank of Nigeria (CBN) to explore the possibility of apex banks providing the necessary financing for the market makers.
He urged the Securities and Exchange Commission (SEC) to ensure speedy approval of applications of interested market makers.
Mr Sehinde Adenagbe, the Chief Executive Officer, Standard Union Securities Ltd., commended NSE for efforts aimed at restoring investor confidence and providing liquidity in the market.
Adenagbe said that the take-off of the operation would consolidate new operating rules aimed at deepening the capital market.
Meanwhile, trading activities on the Nigerian Stock Exchange (NSE) reopened for the week on Wednesday in Lagos on a negative note after the two-day holidays to mark the Christmas celebrations.
The All- Share Index depreciated by 146.03 points or 0.70 per cent to close at 20,617.23 points, against 20,763.26 points recorded on Friday.
Similarly, the Market capitalisation dropped by N46 billion or 0.70 per cent to close at N6.496 trillion compared with N6.542 trillion posted on December 23.
Analysts attributed the downward trend to profit taking embarked upon by investors.
Nigerian Breweries led the losers’ chart with a loss of N5.50 to close at N104.60 per share while Flourmill Plc trailed by N3.12 to close at N59.38 per share.
7UP Plc dipped by N2.44 to close at N46.47, Forte Oil Plc, depreciated by 0.64K to close at N12.23, while Union Bank of Nigeria lost 0.55k to close at N10.60 per share.
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