Renaissance Capital, the emerging markets investment bank, has begun offering securities lending and market-making services in Nigeria.
The launch of the services follows the formal commencement of a pilot programme for market-making, securities lending and short-selling services on the Nigerian Stock Exchange (NSE) on Sept 18, Renaissance Capital was appointed by the Nigerian Stock Exchange to initiate these services for clients.
As a primary market maker (PMM), Renaissance will be responsible for creating an orderly market, and supporting enhanced liquidity on the exchange, although PMMs are not expected to act as liquidity providers of last resort. NSE market makers are required to provide bid and offer quotes within the daily circuit-breaker limit for stocks in which they make a market. The determination of spread and quote sizes will be at the sole discretion of the PMMs. The circuit breaker for stocks in which the PMMs will commence making markets during the pilot scheme is 10%, while that for other stocks remains at 5%.
The pilot scheme, initiated by NSE management, permits PMMs to start with one or two securities of their choice from the basket allocated to them for the first six months of the new initiative (the pilot period).
PMMs have the option to add more stocks from their baskets into the market-making programme over time. Once a stock is added, the circuit breaker automatically changes to 10%. The NSE will update the list with newly added stocks bi-weekly.
This is yet another important milestone in the development of the Nigerian Stock Exchange, said Yvonne Ike, Renaissance Capital CEO West Africa. Renaissance Capital is delighted to bring its experience from other emerging markets to bear on this initiative, and we believe that this initiative will help to build a more buoyant and efficient stock market. This service will further drive interest from international investors to invest in Nigerian equities, and strengthen our commitment to attracting local investors to the Nigerian equities market.
(JDC)